Coherent (COHR) 10-K risk factor changes: FY2020 vs FY2020

The following discussion is not an all-inclusive listing of risks, although we believe these are the [removed: more] material risks that we face.

We continue to make investments in programs with the goal of gaining a greater share of end markets using semiconductor lasers and other [removed: components] [added: components,] including those used for 3D sensing and emerging 5G technology.

[removed: Widespread] [added: A widespread] health [removed: crises, including the global novel coronavirus (COVID-19) pandemic,] [added: crises] could materially and adversely affect our business, financial condition, and results of operations.

[removed: We are] [added: In the early stages of the outbreak of the global novel coronavirus (COVID-19) in 2020, we] closely [removed: monitoring] [added: monitored] the impact of the COVID-19 pandemic on all aspects of our business, including the impact to our suppliers, customers, and [removed: employees] [added: employees,] as well as [removed: the impact to the countries and markets in which we operate.]

[removed: At the onset of the COVID-19 outbreak, we] [added: We] began focusing intensely on mitigating the adverse impacts of COVID-19 on our foreign and domestic operations, starting by protecting our employees, suppliers, and customers.

[removed: Significant] [added: - significant] reductions in demand for one or more of our products or a curtailment to one or more of our product lines [removed: may be] caused by, among other things, [removed: the] [added: any] temporary inability of our customers to purchase and utilize our products in next-stage manufacturing due to shutdown orders or financial [removed: hardship.][added: hardship;]

[removed: We may face] [added: -] disruptions [removed: from] [added: to] our third-party manufacturing and raw materials supply arrangements caused by constraints over [removed: their] [added: our suppliers’] workforce [removed: capacity or their own financial] [added: capacity, financial,] or operational [removed: difficulties.][added: difficulties;]

[removed: There is also] [added: -] heightened risk and uncertainty regarding the loss or disruption of [removed: other] essential third-party service providers, including transportation services, contract manufacturing, marketing, and distribution [removed: services.][added: services;]

[removed: Governmental] [added: - requirements to comply with governmental] and regulatory responses [removed: to the pandemic may include] [added: such as] quarantines, import/export restrictions, price controls, or other governmental or regulatory actions, including closures or other restrictions that limit or close our operating and manufacturing facilities, restrict our workforce’s ability to travel or perform necessary business functions, or otherwise impact our suppliers or customers, which could adversely impact our operating [removed: results.][added: results; and]

Global economic [removed: downturns, including any downturn related to COVID-19,] [added: downturns] may adversely affect our business, operating results, and financial condition.

All aspects of our [removed: Company’s forecast] [added: forecasts] depend on estimates of growth or contraction in the markets we serve.

Some systems that use our products are complex in design, and our products may contain defects that are not detected until deployed, which could increase our costs, reduce our revenues, cause us to lose key customers, [removed: and may] [added: or] expose us to litigation related to our products.

[removed: Consequently, we expect to continue to consider] strategic acquisition of businesses, products, or technologies complementary to our business.

We have in the past acquired several companies, including the completion of our acquisition of Finisar Corporation (“Finisar”) in [removed: September] 2019.

We may continue to expand and diversify our operations with additional [removed: acquisitions.][added: acquisitions, such as our pending acquisition of Coherent, Inc. (“Coherent”).]

To the extent that we [removed: are successful in making] [added: complete] acquisitions, we may be unsuccessful in integrating acquired companies or product lines with existing operations, or the integration may be more difficult or more costly than anticipated.

[added: -] In connection with acquisitions, we may:

[removed: - use] [added: ◦use] a signification portion of our available cash;

[removed: - issue] [added: ◦issue] equity securities, which would dilute current shareholders’ percentage ownership;

[removed: - incur] [added: ◦incur] significant debt;

[removed: - incur] [added: ◦incur] or assume contingent liabilities, known or unknown, including potential lawsuits, infringement actions, or similar liabilities;

[removed: - incur] [added: ◦incur] impairment charges related to goodwill or other intangibles; and

[removed: - face] [added: ◦face] antitrust or other regulatory inquiries or actions.

In addition, the market [removed: price] [added: prices] of our [removed: common stock or our 6.00% Series A Mandatory Convertible Preferred Stock (“Mandatory Convertible Preferred Stock”)] [added: outstanding securities] could be adversely affected if the effect of any acquisitions on our consolidated financial results is dilutive or is below the market’s or financial analysts’ expectations, or if there are unanticipated changes in the business or financial performance of the acquired or combined company.

Although [removed: II-VI continues to] [added: we] expect that [removed: its acquisition of Finisar] [added: our acquisitions] will result in cost savings, synergies, and other benefits, [removed: the combined company] [added: we] may not realize those benefits, or be able to retain those benefits even if realized.

The success of [removed: II-VI’s acquisition of Finisar] [added: our acquisitions] will [removed: continue to] depend in large part on [removed: the] [added: our] success [removed: of the management of the combined company] in integrating the [added: acquired] operations, strategies, technologies, and [removed: personnel of the two companies.][added: personnel.]

[removed: The combined company] [added: We] may fail to realize some or all of the anticipated benefits of [removed: the combination] [added: an acquisition] if the integration process takes longer than expected or is more costly than expected.

[removed: The failure of the combined company] [added: If we fail] to meet the challenges involved in successfully integrating [removed: the] [added: any acquired] operations [removed: of the two companies] or to otherwise realize any of the anticipated benefits of [removed: the combination,] [added: an acquisition,] including [removed: additional] [added: any expected] cost savings and synergies, [removed: could impair the] [added: our] operations [removed: of the combined company.][added: could be impaired.]

In addition, [removed: II-VI continues to believe that] the overall integration of [removed: Finisar will] [added: an acquired business can] be a time-consuming and expensive process that, without proper planning and effective and timely implementation, could significantly disrupt [removed: the combined company’s] [added: our] business.

Potential difficulties that [removed: the combined company] [added: we] may encounter in the integration process include:

- the retention of, and possible decrease in business from, existing customers [removed: of both companies;]

- the reduction of the costs associated with [removed: each company’s] [added: combined] operations;

- potential unknown liabilities associated with the [removed: merger.][added: acquired business.]

The anticipated cost savings, synergies, and other benefits of [removed: the] [added: any] acquisition [removed: of Finisar] [added: typically] assume a successful integration of the [removed: companies] [added: acquired business] and are based on projections and other assumptions, which are inherently uncertain.

We manufacture products in [removed: the] Australia, China, Germany, Malaysia, the Philippines, Singapore, South Korea, Sweden, Switzerland, the United Kingdom, the United States, and Vietnam, and through a contract manufacturer in Thailand.

In addition, multiple complex issues may arise concurrently in different countries, potentially hampering our [removed: management’s] ability to respond in an effective and timely manner.

[added: Any inability] to [added: respond in an effective and timely manner to] issues in our global operations could have a material adverse effect on our business, results of operations, or financial condition.

Then, in July [removed: 2018] [added: 2018,] the United States imposed increased tariffs on products of Chinese origin, and China responded by increasing tariffs on U.S.-origin goods.

On the export side, denial orders and placing companies on the [removed: U.S] [added: U.S.] entity list could decrease our access to customers and markets and materially impact our revenues in the aggregate.

In April 2018, for example, the U.S. Department of Commerce issued a denial [removed: order against two companies in the telecommunications market.]

The outbreak of a widespread health crisis, whether global in scope or localized in an area in which we, our customers or our suppliers do business, could have a material adverse effect on our operations and the operations of our suppliers and customers.

Potential impacts on our operations include:

- workforce constraints triggered by any applicable shutdown orders or stay-at-home polices;

- increased operating expenses and potentially reduced efficiency of operations.

the impact to the countries and markets in which we operate.

While we believe that we have been successful in identifying, managing, and mitigating the economic disruption impacts of the COVID-19 pandemic on us, we cannot provide any assurance that we similarly will be able to mitigate the impacts of any future widespread health crises, including as a result of any variants of COVID-19.

Factors beyond our current knowledge or control, including the duration and severity of any outbreak, as well as any resulting governmental and regulatory actions, could cause any such crisis to have a material adverse effect on our business, operating results, and financial condition.

Consequently, we expect to continue to consider

order against two companies in the telecommunications market.

Holders of the 2036 Notes also have the right to require Finisar to repurchase all or a portion of their 2036 Notes for cash on certain specified dates at a repurchase price equal to 100% of the principal amount of the 2036 Notes to be

repurchased, plus accrued and unpaid interest.

The next such repurchase date for the 2036 Notes is December 15, 2021.

As of June 30, 2021, we had approximately $1.4 billion of outstanding indebtedness on a consolidated basis.

determine the adequacy of our provision for income taxes.

Risks Relating to Our Pending Acquisition of Coherent

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

Our business differs from that of Coherent.

Accordingly, our results of operations and the market price of our securities after the completion of our pending acquisition of Coherent may be affected by factors different from those currently affecting the independent results of operations of each company.

In addition, the issuance of shares of our common stock as part of the merger consideration payable in connection with the acquisition could on its own have the effect of depressing the market prices for our securities, including our common stock and our 6.00% Series A Mandatory Convertible Preferred Stock (“Mandatory Convertible Preferred Stock”).

Further, many Coherent stockholders may decide not to hold the shares of our common stock that they receive as merger consideration.

Other Coherent stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of our common stock that they receive as merger consideration.

Any such sales of our common stock could have the effect of depressing the market prices for our securities

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

We intend to finance part of the cash portion of the merger consideration payable in our acquisition of Coherent with the proceeds of debt financing.

To this end, we have entered into a debt commitment letter (the “Debt Commitment Letter”) containing commitments for a senior secured term loan “A” facility in an aggregate principal amount of $850 million, a senior secured term loan “B” facility in an aggregate principal amount of $2,800 million, a senior secured revolving credit facility in an aggregate principal amount of $350 million and a senior unsecured bridge loan facility in an aggregate principal amount of $1,125 million.

We have not entered into any definitive agreement for this debt financing or other financing arrangements in lieu thereof, and the obligation of the lender to provide the debt financing under the Debt Commitment Letter is subject to a number of customary conditions.

There is a risk that these conditions will not be satisfied and the debt financing may not be available when required.

We also intend to finance part of the cash portion of the merger consideration with the proceeds of equity investments made by BCPE Watson (DE) SPV, LP, an affiliate of Bain Capital Private Equity, LP (“BCPE”).

To this end, on March 30, 2021, we entered into an amended and restated investment agreement (the “Investment Agreement”) with BCPE.

On March 31, 2021, we issued and sold 75,000 shares of a new Series B-1 Convertible Preferred Stock, no par value (“Series B-1 Preferred Stock”), to BCPE for an aggregate purchase price of $750 million.

Subject to the terms and conditions of the Investment Agreement, we and BCPE also have agreed that we will issue and sell to BCPE, immediately prior to the closing of our acquisition of Coherent, an aggregate of 140,000 shares of a new Series B-2 Convertible Preferred Stock, no par value (“Series B-2 Preferred Stock” and together with Series B-1 Preferred Stock, the “Series B Preferred Stock”), for an aggregate purchase price of $1.4 billion.

However, the issuance and sale of the Series B-2 Preferred Stock to BCPE is subject to a number of customary conditions, and there can be no assurance that this part of the equity financing will be completed.

In the event that the debt financing contemplated by the Debt Commitment Letter or the remaining investment contemplated by the Investment Agreement is not consummated, there is a risk that alternate financing may not be available on acceptable terms, in a timely manner or at all.

Although our obligation to consummate our acquisition of Coherent is not conditioned upon the consummation of either of the debt financing contemplated by the Debt Commitment Letter or the remaining investment contemplated by the Investment Agreement, if we are unable to complete either of those financing transactions, the completion of our acquisition of Coherent may be delayed or not completed, in which case we would be in breach of our obligations under the merger agreement containing the terms of the acquisition.

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

The agreements that will govern indebtedness to be incurred or assumed in connection with our acquisition of Coherent, including pursuant to the related debt financing contemplated by the Debt Commitment Letter, are expected to contain various affirmative and negative covenants that will, subject to certain significant exceptions, restrict our ability to, among other things, have liens on our property, incur additional indebtedness, enter into sale and lease-back transactions, make loans, advances or other investments, make non-ordinary course asset sales, declare or pay dividends or make other distributions with respect to equity interests, and/or merge or consolidate with any other person or sell or convey certain of our assets to any one person, among other things.

In addition, the definitive documentation governing certain of the facilities is expected to contain financial maintenance covenants that will require us to maintain a certain leverage ratio and an interest coverage ratio at the end of each fiscal quarter.

Our ability to comply with these provisions may be affected by events beyond our control.

Failure to comply with

these covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations under the applicable definitive documentation or under other debt agreements.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the United States and world.

Workforce constraints triggered by shutdown orders and stay-at-home polices may present challenges in meeting our obligations to our customers and achieving cost and operational targets.

For example, approximately 45% of our global facilities are subject to a government order, including approximately 10% that are currently closed, most of which are administrative facilities where employees are working remotely.

We expect facilities to continue to be subject to similar government orders for the foreseeable future.

Such efforts to ensure the safety of our workforce, customers, and suppliers may result in increased operating expenses and potentially jeopardize the efficiency of operations.

Such impacts may further increase the difficulty of planning for operations and may adversely impact our results.

We have made efforts to identify, manage, and mitigate the economic disruption impacts of the COVID-19 pandemic to the Company; however, there are factors beyond our knowledge or control, including the duration and severity of this outbreak or any such similar outbreak, as well as further governmental and regulatory actions.

Adverse changes could also occur as a result of economic upswings, such as increased wages and scarce labor pools, and increased interest rates.

Our net sales outside the United States represented a majority of our total sales in each of the last three fiscal years.

Any inability to respond in an effective and timely manner

As of June 30, 2020, we had approximately $2.3 billion of outstanding debt (including our outstanding debt securities and borrowings under our Credit Agreement).

including pricing, warranties, and indemnification terms.

suppliers based outside of the United States, primarily in Asia.

- business acquisitions or divestitures;

shareholders who view the Mandatory Convertible Preferred Stock as a more attractive means of equity participation in us than owning shares of our common stock.

As of June 30, 2020, our total consolidated indebtedness was approximately $2.3 billion, of which an aggregate of approximately $1.9 billion was secured indebtedness of ours, to which the Mandatory Convertible Preferred Stock would have been subordinated.

In addition, we have the ability to, and may, incur additional indebtedness in the future.

[removed: Acquisitions,] [added: Equity and Redeemable Preferred Stock,] to our Consolidated Financial Statements contained in [removed: Item 8 of] this Annual Report on Form [removed: 10-K.][added: 10-K for further details.]

See Note [removed: 9.][added: 11.]

[removed: Debt, to] [added: The funded status of] our [added: defined benefit plans is disclosed in Note 17 to the Company’s] Consolidated Financial Statements [removed: contained] [added: included] in Item 8 of this Annual Report on Form 10-K.

On [removed: June 30,] [added: July 7,] 2020, the Company [removed: announced] [added: closed] its [removed: intention to offer, in concurrent] underwritten public [removed: offerings, newly issued shares of its common stock] [added: offering] and [removed: newly issued] [added: sale of 2 million] shares of [removed: its] Series A Mandatory Convertible Preferred Stock, [removed: "Mandatory Convertible Preferred Stock").][added: as well as its underwritten public offering and sale of approximately 11 million shares of its common stock.]

See Note [removed: 21.][added: 15.]

For fiscal year [removed: 2020,] [added: 2021,] the fair values of the reporting units were determined using a discounted cash flow analysis with projected financial information based on our most recently completed long-term strategic planning processes and also considers the current financial performance compared to our prior projections of the reporting [removed: unit.][added: units.]

As of June 30, [removed: 2020,] [added: 2021,] no reporting units are at risk for impairment.

On March 11, 2020, the World Health Organization designated the novel coronavirus [added: disease] known as COVID-19 as a global pandemic.

In particular, the COVID-19 pandemic [removed: is having] [added: continues to have] a significant impact on global markets due to resulting supply chain and production disruptions, workforce and travel [removed: restrictions, quarantines and shelter-in-place orders, reduced spending and other similar measures implemented by many companies and other factors.][added: restrictions.]

The following table sets forth select items from our Consolidated Statements of Earnings [removed: (Loss)] for the years ended June 30, 2020 and 2019 ($ in millions except per share information):

| | | | | | | Year Ended June 30, 2020 | | | | | | | | | | | | [removed: | | | | | |] Year Ended June 30, 2019 | | | | | | | | | [removed: | | | | | |]

| | | | | | | | | | | | | % of Revenues | | | | | | | | | | | | % of Revenues | | | [removed: | | | | | | | | | | | |]

| Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| Internal research and development | | | | | | [removed: 339.1 | | | | | | 14.2 | | | | | | 139.2] [added: 330] | | | | | | [removed: 10.2] [added: 11] | | | | | | [added: 339] | | | | | | [added: 14] | | |

| Selling, general and administrative | | | | | | [removed: 441.0 | | | | | | 18.5 | | | | | | 233.5] [added: 484] | | | | | | [removed: 17.1] [added: 16] | | | | | | [added: 441] | | | | | | [added: 19] | | |

| Interest and other, net | | | | | | [removed: 103.4 | | | | | | 4.3 | | | | | | 19.8] [added: 50] | | | | | | [removed: 1.5] [added: 2] | | | | | | [added: 103] | | | | | | [added: 4] | | |

| Earnings (Loss) before income tax | | | | | | [removed: (63.9) | | | | | | (2.7) | | | | | | 128.8] [added: 353] | | | | | | [removed: 9.5] [added: 11] | | | | | | [added: (64)] | | | | | | [added: (3)] | | |

| Diluted earnings [removed: (loss)] per share | | | | | | $ | (0.79) | | | | | | | | | | | $ | 1.63 | | | | | | | | [removed: | | | | | | | | | | | |]

Revenues. Revenues for the year ended June 30, 2020 increased 75% to [removed: $2,380.1] [added: $2,380] million, compared to [removed: $1,362.4] [added: $1,362] million for [removed: the prior] fiscal [removed: year.][added: year 2019.]

The increase in revenues [removed: is] [added: was] primarily attributed to the acquisition of Finisar, which contributed [removed: $938.4] [added: $938] million of revenues for the fiscal year ended June 30, 2020.

Compound Semiconductors recorded a 13% revenue increase during [removed: the current] fiscal [removed: year,] [added: year 2020,] which in addition to revenues from Finisar, was driven by strengthening demand for SiC substrate products addressing RF electronics and high-power switching systems.

Gross margin. Gross margin for the year ended June 30, [removed: 2020] [added: 2021] was [removed: $819.6] [added: $1,216] million, or [removed: 34.4%,] [added: 39%,] of total revenues, compared to [removed: $521.3] [added: $820] million, or [removed: 38.3%] [added: 34%] of total revenues, for the same period last fiscal year.

Gross margin as a percentage of revenues decreased 380 basis points compared to [removed: the prior] fiscal year [added: 2019] despite the 75% increase in revenues during this same [removed: period.][added: fiscal year.]

Gross margin was negatively impacted by additional cost of goods sold of [removed: $87.7] [added: $88] million related to the fair value adjustment of the acquired Finisar inventory, and as the result of product mix relating to Finisar's Transceiver product line which has a lower gross margin profile than the Company's historical margins.

Internal research and development. Company-funded internal research and development (“IR&D”) expenses for the fiscal year ended June 30, [removed: 2020] [added: 2021] were [removed: $339.1] [added: $330] million, or [removed: 14.2%] [added: 11%] of revenues, compared to [removed: $139.2] [added: $339] million, or [removed: 10.2%.][added: 14%.]

The increase in IR&D expenses [removed: is] [added: was] primarily due to the Company continuing to invest in new products and processes across all its businesses including investments in 5G technology, 3D Sensing, indium phosphide, LIDAR and other emerging market trends.

Selling, general and administrative. Selling, general and administrative (“SG&A”) expenses for the year ended June 30, [removed: 2020] [added: 2021] were [removed: $441.0] [added: $484] million, or [removed: 18.5%] [added: 16%] of revenues, compared to [removed: $233.5] [added: $441] million, or [removed: 17.1%] [added: 19%] of revenues, last fiscal year.

Interest and other, net. Interest and other, net for the year ended June 30, 2020 was expense of [removed: $103.4] [added: $103] million compared to expense of [removed: $19.8] [added: $20] million [removed: last] fiscal [removed: year.][added: year 2019.]

Interest and other, net primarily includes [removed: $89.4] [added: $89] million for interest expense on borrowings, [removed: $14.4] [added: $14] million of foreign currency losses, and [removed: $2.8] [added: $3] million of equity earnings from unconsolidated investments.

In addition, the Company expensed [removed: $4.0] [added: $4] million of debt extinguishment costs during [removed: the current] fiscal year [added: 2020] and recorded a [removed: $5.0] [added: $5] million impairment charge for an unconsolidated investment as its carrying value was determined to be unrecoverable.

Income taxes. The Company’s year-to-date effective income tax rate at June 30, [removed: 2020] [added: 2021] was [removed: a (4.9)% benefit,] [added: 16%,] compared to an effective tax rate of [removed: 16.6%] [added: (5)%] last fiscal year.

[removed: The current fiscal year’s] [added: Fiscal year 2020’s] effective tax rate was negatively impacted by the U.S. enacted tax legislation related to [removed: global intangible low tax income (“GILTI”)] [added: GILTI] partially offset by research and development incentives in certain jurisdictions.

Operating income differs from income from operations in that operating income excludes certain [removed: operational] expenses included in [added: interest and] other [removed: expense (income), net,] [added: (net),] as reported.

| | | | | | | Year Ended June 30, | | | | | | | | | | | | [removed: | | | | | |] % Increase/(Decrease) | | |

| | | | | | | 2020 | | | | | | 2019 | | | | | | | | | [removed: | | | | | |]

| Operating income | | | | | | $ | [removed: 49.9] [added: 50] | | | | | $ | [removed: 81.9] [added: 82] | | | | | (39) | | % | [removed: | | | | | |]

The above operating results for the year ended June 30, [removed: 2020] [added: 2021] include the Company’s acquisition of Finisar in September 2019.

Revenues for the year ended June 30, 2020 for Photonic Solutions increased 141% to [removed: $1,536.8] [added: $1,537] million, compared to [removed: $638.9] [added: $639] million for [removed: last] fiscal [removed: year.][added: year 2019.]

Included in [removed: the current year’s revenues were $903.5] [added: revenue for fiscal year 2020 was $904] million of revenues from the Finisar acquisition.

Operating income for the year ended June 30, 2020 for Photonic Solutions decreased 39% to [removed: $49.9] [added: $50] million, compared to an operating income of [removed: $81.9] [added: $82] million [removed: last] [added: for] fiscal [removed: year.][added: year 2019.]

Pending Acquisition of Coherent, Inc.

On March 25, 2021, II-VI, Coherent, Inc. (“Coherent”) and Watson Merger Sub Inc., a wholly owned subsidiary of II-VI (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”).

Pursuant to the terms of the Merger Agreement, and subject to the conditions set forth therein, Merger Sub will be merged with and into Coherent, and Coherent will continue as the surviving corporation in the merger and wholly owned subsidiary of II-VI (the “Merger”).

Pursuant to the terms of the Merger Agreement, and subject to the conditions set forth therein, at the effective time of the Merger (the “Effective Time”), each share of common stock of Coherent (the “Coherent Common Stock”) issued and outstanding immediately prior to the Effective Time will be canceled and extinguished and automatically converted into the right to receive the following consideration (collectively, the “Merger Consideration”): (A) $220.00 in cash, without interest (the “Cash Consideration”), and (B) 0.91 of a validly issued, fully paid and nonassessable share of our common stock of II-VI.

Pursuant to the terms of the Merger Agreement, each Coherent restricted stock unit award (a “Coherent RSU”), other than Director RSUs (as defined below), outstanding immediately prior to the Effective Time will be automatically converted into time-based restricted stock units denominated in shares of II-VI Common Stock entitling the holder to receive, upon settlement, a number of shares of II-VI Common Stock equal to the number of shares of Coherent Common Stock subject to the Coherent RSU multiplied by the sum of (A) 0.91, and (B) the quotient obtained by dividing the Cash Consideration by the volume weighted average price of a share of II-VI Common Stock for a 10 trading day period ending prior to the closing of the Merger

(the “Closing”).

For Coherent RSUs subject to performance-based vesting conditions and metrics, the number of shares of II-VI Common Stock subject to the converted Coherent RSUs will be determined after giving effect to the Coherent Board of Directors’ determination of the number of Coherent RSUs earned, based on the greater of the target or actual level of achievement of such goals or metrics immediately prior to the Effective Time.

The converted Coherent RSUs generally will be subject to the same terms and conditions that applied to the awards immediately prior to the Effective Time, provided that any Coherent RSUs subject to performance-based vesting conditions will be subject solely to time- and service-based vesting.

Each Coherent RSU that is outstanding as of the date of the Merger Agreement and as of immediately prior to the Effective Time will be entitled to certain vesting acceleration benefits.

Each Coherent RSU granted to a non-employee member of Coherent’s Board of Directors (“Director RSUs”) (whether or not vested) that is outstanding immediately prior to the Effective Time will automatically vest in full and be canceled and converted into the right to receive the Merger Consideration as if such Director RSU had been settled in shares of Coherent Common Stock immediately prior to the Effective Time.

The Boards of Directors of II-VI and Coherent unanimously approved the Merger and the Merger Agreement.

II-VI filed with the SEC a registration statement on Form S-4 relating to the Merger, and the SEC declared that registration statement to be effective on May 6, 2021.

Shareholders of II-VI and stockholders of Coherent voted to approve proposals related to the Merger at special meetings held on June 24, 2021 by the respective companies.

The completion of the Merger is subject to the satisfaction or waiver of certain additional customary closing conditions, including review and approval of the Merger by the State Administration for Market Regulation in China.

Subject to the satisfaction or waiver of each of the closing conditions, II-VI expects that the Merger will be completed by the end of the first calendar quarter of 2022.

However, it is possible that factors outside the control of both companies could result in the Merger being completed at a different time or not at all.

In connection with entering into the Merger Agreement, II-VI has obtained a fully underwritten financing commitment pursuant to a commitment letter (the “Commitment Letter”), dated as of March 25, 2021, as further amended and restated on April 21, 2021, with JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc., MUFG Bank, Ltd., MUFG Securities Americas Inc., PNC Capital Markets LLC, PNC Bank, National Association, HSBC Securities (USA) Inc., HSBC Bank USA, National Association, Citizens Bank, N.A., Mizuho Bank, Ltd., BMO Capital Markets Corp., Bank of Montreal, TD Securities (USA) LLC, The Toronto-Dominion Bank, New York Branch, TD Bank, N.A. and First National Bank of Pennsylvania (collectively, the “Commitment Parties”) pursuant to which the Commitment Parties have committed to provide up to $5.1 billion in debt financing ( the “Debt Financing”).

The obligation of the Commitment Parties to provide the Debt Financing provided for in the Commitment Letter is subject to a number of customary conditions.

In connection with entering into the Merger Agreement, II-VI entered into an Amended and Restated Investment Agreement, dated as of as of March 30, 2021, the “Investment Agreement”), with BCPE Watson (DE) SPV, LP, an affiliate of Bain Capital Private Equity, LP (the “Investor”).

Pursuant to the terms of the Investment Agreement, on March 31, 2021, II-VI issued, sold, and delivered to the Investor 75,000 shares of a new Series B-1 Convertible Preferred Stock of the Company (“II-VI Series B-1 Convertible Preferred Stock”) for $10,000 per share (the “Equity Per Share Price”), resulting in an aggregate purchase price of $750 million.

Subject to the terms and conditions of the Investment Agreement, among other things, the Company and the Investor also agreed that the company would issue, sell and deliver to the Investor:

- 105,000 shares of a new Series B-2 Convertible Preferred Stock of the Company (“II-VI Series B-2 Convertible Preferred Stock”) for a purchase price per share equal to the Equity Per Share Price, resulting in an aggregate purchase price of $1.1 billion, immediately prior to Closing; and

- immediately prior to Closing, the company will receive up to an additional 35,000 shares of II-VI Series B-2 Convertible Preferred Stock (the "Upsize Shares") for a purchase price per share equal to the Equity Per Share Price, resulting in an aggregate maximum purchase price for the Upsize Shares of $350 million.

This was agreed on June 8, 2021 of its agreement to purchase the Upsize Shares from the Company immediately prior to the Closing, increasing the investor’s total equity commitment to II-VI pursuant to the Investment Agreement to $2.2 billion.

The expenses associated with the pending acquisition for the year ended June 30, 2021, have not been allocated to an Operating Segment, and are presented in the Unallocated and Other within this Annual Report on Form 10-K.

*Series A Preferred Stock*

As described in Note 11.

Equity and Redeemable Preferred Stock, of the Notes to our Consolidated Financial Statements, on July 7, 2020, the Company issued shares of Series A Mandatory Convertible Preferred Stock.

Upon conversion, on the mandatory conversion date, each outstanding share of Series A Mandatory Convertible Preferred Stock, unless previously converted, will automatically convert into a number of shares of the Company’s common stock determined based on the market value of the Company’s common stock on the mandatory conversion date, defined as July 1, 2023.

The accounting for the issuance of the Series A Mandatory Convertible Preferred Stock involved significant estimation in approximating the future market value of the Company’s common stock on the mandatory conversion date, which was used to determine whether the Series A Mandatory Convertible Preferred Stock should be classified within shareholders’ equity on the consolidated balance sheet as well as the whether the Preferred Stock should be classified as a participating security.

Management estimated the future market value of its common stock on the mandatory conversion date, through development of a Monte Carlo simulation model.

A sensitivity analysis was also performed to confirm the reasonableness of the assumptions, which included volatility and cost of equity.

The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances.

Actual results could differ from those estimates.

| | | | | | | Year Ended June 30, 2021 | | | | | | | | | | | | Year Ended June 30, 2020 | | | | | | | | |

| Total revenues | | | | | | $ | 3,106 | | | | | 100 | | % | | | | $ | 2,380 | | | | | 100 | | % |

| Cost of goods sold | | | | | | 1,890 | | | | | | 61 | | % | | | | 1,561 | | | | | | 66 | | % |

| Gross margin | | | | | | 1,216 | | | | | | 39 | | | | | | 820 | | | | | | 34 | | |

| Income taxes | | | | | | 55 | | | | | | 2 | | | | | | 3 | | | | | | — | | |

| | | | | | | $ | 298 | | | | | 10 | | % | | | | $ | (67) | | | | | (3) | | % |

In September 2019, the Company completed its acquisition Finisar Corporation (“Finisar”), See Note 3.

The operating results of this acquisition have been reflected in the selected financial information of the Company’s Photonic Solutions segment and Compound Semiconductors Segment beginning on October 1, 2019, with the results from September 24, 2019 to September 30, 2019 reflected in Unallocated and Other.

Finisar is a global technology leader in optical communications, providing components and subsystems to networking equipment manufacturers, data center operators, telecom service providers, consumer electronics and automotive companies.

Finisar, headquartered in Sunnyvale, California, designs products that meet the increasing demands for network bandwidth, data storage and 3D sensing subsystems.

As part of the Finisar acquisition, the Company entered into a new Amended and Restated Credit Agreement, dated as of September 24 2019.

This agreement secured $2.425 billion in aggregate principle amount of senior secured credit facilities.

In addition, the underwriters were granted a 30-day option to purchase additional shares of its common stock at the applicable public offering price, less underwriting discounts and commissions, and shares of Series A Mandatory Convertible Preferred Stock at the applicable public offering price, less underwriting discounts and commissions and solely to cover over-allotments with respect to the preferred stock offering.

Subsequent Event, to our Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further details.

*Business Combinations*

The Company accounts for business acquisitions under the acquisition method of accounting whereby the total purchase price is allocated to tangible and intangible assets acquired and liabilities assumed based on the respective fair values.

In determining the fair value of intangible assets acquired, the Company must make assumptions about the future performance of the acquired business, including among other things, the forecasted revenue growth attributable to the asset group and projected operating expenses inclusive of expected synergies, including future cost savings, and other benefits expected to be achieved by combining the Company and Finisar.

The Company’s intangible assets are comprised of customer relationships, trade names and developed technology.

The estimated fair value of the customer relationships, trade names and developed technology are determined using the multi-period excess earnings method and relief from royalty methods.

Both methods require forward looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group that could be affected by future economic and market conditions.

The estimated fair value of the developed technology is also dependent on the selection of the royalty rate used in the valuation method.

Different assumptions for certain intangible assets may result in materially different values for these assets, which would impact the Company’s financial position and future results of operations.

Following the initial outbreak of COVID-19, we experienced temporary disruptions to our operations in China.

While these operations have returned to active service, approximately 45% of our global facilities are subject to a government order, including approximately 10% that are currently closed, most of which are administrative facilities where employees are working remotely.

Certain of our customers and suppliers currently are impacted by similar operational restrictions.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total revenues | | | | | | $ | 2,380.1 | | | | | 100.0 | | % | | | | $ | 1,362.4 | | | | | 100.0 | | % | | | | | | | | | | | | |

| Cost of goods sold | | | | | | 1,560.5 | | | | | | 65.6 | | % | | | | 841.1 | | | | | | 61.7 | | % | | | | | | | | | | | | |

| Gross margin | | | | | | 819.6 | | | | | | 34.4 | | | | | | 521.3 | | | | | | 38.3 | | | | | | | | | | | | | | |

| Income taxes | | | | | | 3.1 | | | | | | 0.1 | | | | | | 21.3 | | | | | | 1.6 | | | | | | | | | | | | | | |

| Net earnings (loss) | | | | | | $ | (67.0) | | | | | (2.8) | | % | | | | $ | 107.5 | | | | | 7.9 | | % | | | | | | | | | | | | |

See Note 14.

Effective July 1, 2019, the Company realigned its composition of its operating segments.

The Company combined II-VI Laser Solutions and II-VI Performance Products, and renamed the combined segment Compound Semiconductors.

All applicable segment information has been restated to reflect this change.

Additionally, the Company changed the name of II-VI Photonics to Photonic Solutions.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Revenues | | | | | | $ | 1,536.8 | | | | | $ | 638.9 | | | | | 141 | | % | | | | | | |

| Revenues | | | | | | $ | 821.2 | | | | | $ | 723.6 | | | | | 13 | | % | | | | | | |

| Total revenues | | | | | | $ | 1,362.4 | | | | | 100.0 | | % | | | | $ | 1,158.8 | | | | | 100.0 | | % | | | | | | | | | | | | |

| Cost of goods sold | | | | | | 841.1 | | | | | | 61.7 | | | | | | 696.6 | | | | | | 60.1 | | | | | | | | | | | | | | |

| Gross margin | | | | | | 521.3 | | | | | | 38.3 | | | | | | 462.2 | | | | | | 39.9 | | | | | | | | | | | | | | |

| Income taxes | | | | | | 21.3 | | | | | | 1.6 | | | | | | 34.2 | | | | | | 3.0 | | | | | | | | | | | | | | |

| Net earnings | | | | | | $ | 107.5 | | | | | 7.9 | | % | | | | $ | 88.0 | | | | | 7.5 | | % | | | | | | | | | | | | |

The increase in revenues during fiscal year 2019 was driven by strong demand from customers across the majority of the Company’s business units.

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, which is primarily focused on its exposure in relation to the [removed: Japanese Yen,] Chinese Renminbi, Swiss Franc, [removed: Euro.][added: Malaysian Ringgit and the Japanese Yen.]

As of June 30, [removed: 2020,] [added: 2021,] the Company’s total borrowings include variable rate borrowings, which exposes the Company to changes in interest rates.

[removed: If] [added: With] the [removed: Company had not hedged its variable rate debt,] [added: hedge in place,] a change in the interest rate of 100 basis points on these variable rate borrowings would have resulted in additional interest expense of [removed: $15.8] [added: $12] million for the year ended June 30, [removed: 2020.][added: 2021.]

However in March of 2020, the Federal Reserve lowered the interest rates, putting our hedge in a negative position.

and the Malaysian Ringgit.

Our headquarters are located at 375 Saxonburg Boulevard, Saxonburg, Pennsylvania [removed: 16056.][added: 16056, U.S.A. Our telephone number is +1-724-352-4455.]

The majority of our revenues are attributable to the sale of engineered materials and optoelectronic components, devices, and subsystems for the optical communications, [removed: industrial materials processing,] [added: industrial,] aerospace and defense, and consumer electronics markets.

Reference to [removed: “fiscal” or] [added: “fiscal,”] “fiscal [removed: year”] [added: year,” or "FY"] means our fiscal year ended June 30 for the year referenced.

The following [added: defined] terms are [removed: defined for reference:] [added: used in this Annual Report on Form 10-K:] bismuth telluride [removed: (“Bi2Te3”);] [added: (Bi2Te3);] cadmium telluride [removed: (“CdTe”);] [added: (CdTe);] carbon dioxide [removed: (“CO2”); carbon monoxide (“CO”);] [added: (CO2);] chemical vapor deposition [removed: (“CVD”)] [added: (CVD)] of materials including diamond; [removed: deep ultraviolet (“DUV”) lithography;] [added: datacenter interconnect (DCI);] dense wavelength division multiplexing [removed: (“DWDM”);] [added: (DWDM);] extreme-ultraviolet [removed: (“EUV”)] [added: (EUV)] lithography; 5th-generation [removed: (“5G”)] [added: (5G)] wireless; 4th-generation [removed: (“4G”)] [added: (4G)] wireless; gallium arsenide [removed: (“GaAs”);] [added: (GaAs);] gallium nitride [removed: (“GaN”);] [added: (GaN);] gigabit Ethernet [removed: (“GbE”);] [added: (GbE);] gigabit per second [removed: (“Gbps”);] [added: (Gbps);] high-definition multimedia interface [removed: (“HDMI”);] [added: (HDMI);] high-electron-mobility transistor [removed: (“HEMT”);] [added: (HEMT);] indium phosphide [removed: (“InP”);] [added: (InP);] infrared [removed: (“IR”);] [added: (IR); integrated circuit (IC);] intellectual property [removed: (“IP”);] [added: (IP);] light detection and ranging [removed: (“LiDAR”);] [added: (LiDAR);] liquid crystal [removed: (“LC”);] [added: (LC);] liquid crystal on silicon [removed: (“LCOS”);] [added: (LCOS); millimeters (mm);] nanometers [removed: (“nm”);] [added: (nm);] near-infrared [removed: (“NIR”);] [added: (NIR);] optical channel monitor [removed: (“OCM”); organic light-emitting diode (“OLED”);] [added: (OCM);] original equipment manufacturer [removed: (“OEM”);] [added: (OEM);] optical time-domain reflectometer [removed: (“OTDR”);] [added: (OTDR);] polymerase chain reaction [removed: (“PCR”);] [added: (PCR);] radio frequency [removed: (“RF”);] [added: (RF);] reconfigurable optical add/drop multiplexer [removed: (“ROADM”);] [added: (ROADM);] research and development [removed: (“R&D”);] [added: (R&D);] research, development, and engineering [removed: (“RD&E”);] [added: (RD&E);] silicon carbide [removed: (“SiC”);] [added: (SiC);] terabit per second [removed: (“Tbps”);] [added: (Tbps);] three-dimensional [removed: (“3D”);] [added: (3D); transimpedance amplifier (TIA);] ultraviolet [removed: (“UV”);] [added: (UV);] vertical cavity surface-emitting laser [removed: (“VCSEL”);] [added: (VCSEL);] wavelength division multiplexing [removed: (“WDM”);] [added: (WDM);] wavelength selective switching [removed: (“WSS”);] [added: (WSS);] zinc selenide [removed: (“ZnSe”);] [added: (ZnSe);] and zinc sulfide [removed: (“ZnS”).][added: (ZnS).]

Additional information regarding the [removed: Company’s acquisition] [added: terms] of [removed: Finisar] [added: the Merger] is set forth [removed: below and] in [removed: Note 3.][added: Item 7.]

[removed: Acquisitions] [added: Segment and Geographic Reporting] to our Consolidated Financial [removed: Statements] [added: Statements, which are included] in Item 8 of this Annual Report on Form [removed: 10-K.][added: 10-K and are incorporated herein by reference.]

[removed: Due to timing of the acquisition,] [added: The expenses associated with] the [removed: results of Finisar] [added: pending acquisition] for the [removed: three months] [added: year] ended [removed: September] [added: June] 30, [removed: 2019,] [added: 2021,] have not been allocated to an Operating Segment, and are presented in [added: the] Unallocated and Other [removed: within] [added: in] Note [removed: 14.][added: 15, Segment and Geographic Reporting.]

We develop, manufacture, and market engineered materials, optoelectronic components, and devices for use in optical communications, [removed: industrial materials processing,] [added: industrial,] aerospace and defense, consumer electronics, semiconductor capital equipment, life sciences, and automotive applications and markets.

II-VI leverages these capabilities to deliver [removed: miniature-] [added: miniature] to large-scale precision optical assemblies, including those in combination with [removed: thermal management] [added: thermal-management] components, integrated electronics, [removed: and/or] [added: and] software.

These [removed: compound semiconductor] lasers enable optical signal transmission, reception, and amplification in terrestrial and submarine communications networks; high-bit-rate server connectivity between and within datacenters; optical communications network monitoring; materials processing; and fast and accurate measurements in biomedical instruments and consumer electronics.

II-VI continues to improve its operational capabilities, develop next-generation products, and invest in new technology platforms to drive [removed: our] growth in the short term [removed: while keeping] [added: and] the long [removed: term in mind.][added: term.]

With [removed: a] [added: our] strategic focus on fast-growing and sustainable markets, II-VI pursues its mission of enabling the world to be safer, healthier, closer, and more efficient, and strives to attain its vision of a world transformed through innovative materials vital to a better life today and the sustainability of future generations.

Financial data regarding our revenues, results of operations, industry segments, and international sales for the three years ended June 30, [removed: 2020,] [added: 2021,] are set forth in the Consolidated Statements of Earnings (Loss) and in Note [removed: 14.][added: 15.]

For the fiscal year ended June 30, [removed: 2020,] [added: 2021,] our bookings were approximately [removed: $2.7] [added: $3.3] billion, compared with bookings of approximately [removed: $1.4] [added: $2.7] billion for the fiscal year ended June 30, [removed: 2019.][added: 2020.]

As of June 30, [removed: 2020,] [added: 2021,] our backlog was approximately [removed: $957] [added: $1,252] million, compared with approximately [removed: $500] [added: $957] million as of June 30, [removed: 2019.][added: 2020.]

II-VI is headquartered in Saxonburg, Pennsylvania, [added: U.S.A.,] with RD&E, manufacturing, and sales facilities worldwide.

Our U.S. production and RD&E operations are located in Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Massachusetts, Michigan, Mississippi, New Jersey, New York, Ohio, Oregon, Pennsylvania, and Texas, and our non-U.S. production and RD&E operations are based in Australia, China, Germany, Malaysia, the Philippines, Singapore, Sweden, Switzerland, [added: Thailand,] the United Kingdom, and Vietnam.

| | | | [removed: | | |] Number of employees | | | [removed: | | |] Percent of total | | |

| Research, development, engineering, sales and marketing | | | [removed: | | | 4,058 | | |] [added: 4,276] | | | [removed: 16%] [added: 19%] | | |

| Total: | | | [removed: | | | 22,969 | | |] [added: 22,961] | | | 100% | | |

Our success in developing and manufacturing many of our products depends on our ability to manufacture and [removed: to] tailor the optical and physical properties of technically challenging materials and components.

The ability to produce, [removed: process,] [added: process] and refine these complex [removed: materials] [added: materials,] and to control their quality and in-process [removed: yields] [added: yields,] is an expertise of the Company that is critical to the performance of our customers’ subsystems and systems.

In the markets we serve, there is a limited number of high-quality suppliers of many of the components we [removed: manufacture, and there are very few industry-standard products.][added: manufacture.]

[removed: We utilize] [added: In our production processes, we use] numerous optical, electrical, and mechanical parts [removed: in our processes] that [removed: we often also commonly refer to as raw materials, including integrated circuits, mechanical housings, and optical components] [added: are sourced] from third-party [removed: suppliers.][added: supplies.]

Additional research and capital investment [removed: may be] [added: are sometimes] needed to better define future raw materials specifications.

The Photonic Solutions Segment leverages II-VI’s compound semiconductor technology platforms [removed: to deliver components] and [removed: subsystems that are differentiated based on] deep knowledge of end-user applications for our key end [removed: markets.][added: markets to deliver differentiated components and subsystems.]

The Compound Semiconductors Segment is a market leader in [removed: differentiated] [added: engineered] materials and [added: optoelectronic] devices such as those based on GaAs, InP, GaN, and [removed: SiC by independently driving investments that advance its technology roadmaps.][added: SiC.]

We may from time to time reorganize parts of a given segment or corporate center to drive the focus of certain [removed: priorities as identified by the CEO.][added: priorities.]

| [removed: Segment | | |] Business Unit | | | Our Products | | |

| [removed: Photonic Solutions | | |] ROADM | | | •Products and solutions that enable high-bit-rate interconnects for datacenters and communications service providers, datacenter interconnects, ROADM systems, and undersea fiber-optic transmission | | |

| [removed: | | | Coherent Optics] [added: Transceivers] | | | [added: •Pluggable transceivers for Ethernet and Fiber Channel applications in cloud and enterprise datacenter applications] •High-speed optoelectronics and modules for optical communications in telecom networks, including for datacenter interconnects and for metro, regional, long-haul, and ultralong-haul networks | | |

| [removed: | | |] Advanced Optics | | | •Fiber optics and precision optics used in projection displays; crystal materials and components for optical communications; high-power UV, visible, and NIR optics for industrial lasers; filters and assemblies for life sciences as well as for sensors, instrumentation, and semiconductor equipment | | |

| [removed: Compound Semiconductors | | |] Engineered Materials & Laser Optics | | | •Laser optics and accessories for CO2 lasers used in [removed: materials processing,] [added: industrial,] semiconductors, and life sciences [added: applications] •High-power fiber and direct-diode laser optics •Infrared thermal imaging optics and assemblies •Polycrystalline materials production including ZnSe, ZnS, and CVD diamond •Thermoelectric components, subassemblies, and systems for heating, cooling, temperature tuning, thermal cycling, and power generation in aerospace and defense, medical, industrial, automotive, consumer, telecommunications, and energy-production markets •Specialty refining, recycling, and [removed: materials recovery] [added: materials-recovery] services for high-purity rare metals such as selenium and tellurium, as well as related chemical products such as tellurium dioxide for optics, photovoltaics, semiconductors, thermoelectric coolers, metallurgy, agriculture, and industrial applications •Advanced ceramic and metal-matrix composite products for semiconductor capital equipment, flat-panel displays, industrial and optical equipment, and defense applications | | |

| [removed: | | |] Laser Devices & Systems | | | •High-power semiconductor lasers and laser bars enabling fiber and direct-diode lasers for [removed: materials processing, medical,] [added: industrial,] defense, consumer, and printing applications •Laser heads and [removed: modules;] [added: modules,] Q-switched laser [removed: modules; high-power,] [added: modules, high-power] uncooled pump laser [removed: modules;] [added: modules,] laser solutions for [removed: super-hard] [added: superhard] materials [removed: processing;] [added: processing,] high-brightness direct-diode laser engines •Laser processing heads and beam delivery systems for laser materials processing with industrial lasers •High-speed VCSELs for optical communications •High-power pumps for amplifiers and optical communications [added: •Precision optical assemblies, objectives, infrared optics, thin-film coatings, and optical materials •Optical solutions for critical and complex design, engineering, and production challenges in aerospace and defense] | | |

| [removed: | | | Wide Bandgap Semiconductors] [added: New Ventures & Wide-Bandgap Electronics] | | | •SiC and advanced semiconductor materials for high-frequency and high-power electronic device applications in defense, telecommunications, automotive, and industrial markets | | |

| [removed: | | |] Optoelectronic & RF Devices | | | •VCSELs for sensing, including 3D sensing in consumer electronics and automotive applications •GaAs-based RF electronic devices •Integrated circuits for transceivers for optical communications •III-V epitaxial wafers to enable higher-performance photonic and RF components for consumer, communications, network, and mobile applications | | |

| [removed: | | |] InP Devices | | | •Semiconductor lasers and detectors for optical interconnects and sensing applications | | |

Our businesses address the following primary markets: optical and wireless communications, [removed: industrial materials processing,] [added: industrial,] aerospace and defense, consumer electronics, semiconductor capital equipment, life sciences, and automotive.

II-VI’s optical communications and wireless products and technologies enable [removed: the digital transformation in the next generation of] [added: next-generation] high-speed optical transmission systems, networks, and datacenter solutions necessary to meet the accelerating global bandwidth demand.

Demand for our products is largely driven by the continually growing need for additional network bandwidth created by the ongoing proliferation of data and video traffic from video [added: conferencing for work, school, and leisure; video] downloads and [removed: streaming,] [added: streaming;] live [removed: TV,] [added: TV;] social [removed: networking, on-line gaming,] [added: networking; online gaming;] file [removed: sharing,] [added: sharing;] enterprise IP/internet [removed: traffic,] [added: traffic;] cloud [removed: computing,] [added: computing;] and datacenter virtualization that must be handled by both wireline and wireless networks.

Pending Coherent Acquisition

On March 25, 2021, II-VI, Coherent and Watson Merger Sub Inc., a wholly owned subsidiary of II-VI (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”).

Pursuant to the terms of the Merger Agreement, and subject to the conditions set forth therein, Merger Sub will be merged with and into Coherent, and Coherent will continue as the surviving corporation in the merger and wholly owned subsidiary of II-VI (the “Merger”).

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.

The Boards of Directors of II-VI and Coherent unanimously approved the Merger and the Merger Agreement.

II-VI filed with the SEC a registration statement on Form S-4 relating to the Merger, and the SEC declared that registration statement to be effective on May 6, 2021.

Shareholders of II-VI and stockholders of Coherent voted to approve proposals related to the Merger at special meetings held on June 24, 2021 by the respective companies.

The completion of the Merger is subject to the satisfaction or waiver of certain additional customary closing conditions, including review and approval of the Merger by the State Administration for Market Regulation in China.

Subject to the satisfaction or waiver of each of the closing conditions, II-VI expects that the Merger will be completed by the end of the first calendar quarter of 2022.

However, it is possible that factors outside the control of both companies could result in the Merger being completed at a different time or not at all.

In connection with entering into the Merger Agreement, II-VI has obtained a fully underwritten financing commitment pursuant to a commitment letter (the “Commitment Letter”), dated as of March 25, 2021, as further amended and restated on April 21, 2021, with JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc., MUFG Bank, Ltd., MUFG Securities Americas Inc., PNC Capital Markets LLC, PNC Bank, National Association, HSBC Securities (USA) Inc., HSBC Bank USA, National Association, Citizens Bank, N.A., Mizuho Bank, Ltd., BMO Capital Markets Corp., Bank of Montreal, TD Securities (USA) LLC, The Toronto-Dominion Bank, New York Branch, TD Bank, N.A. and First National Bank of Pennsylvania (collectively, the “Commitment Parties”) pursuant to which the Commitment Parties have committed to provide up to $5.1 billion in debt financing ( the “Debt Financing”).

The obligation of the Commitment Parties to provide the Debt Financing provided for in the Commitment Letter is subject to a number of customary conditions.

In connection with entering into the Merger Agreement, II-VI entered into an Amended and Restated Investment Agreement, dated as of March 30, 2021, (the “Investment Agreement”), with BCPE Watson (DE) SPV, LP, an affiliate of Bain Capital Private Equity, LP (the “Investor”).

Pursuant to the terms of the Investment Agreement, on March 31, 2021, II-VI issued, sold, and delivered to the Investor 75,000 shares of a new Series B-1 Convertible Preferred Stock of the Company, no par value per share (“II-VI Series B-1 Convertible Preferred Stock”), for $10,000 per share (the “Equity Per Share Price”), resulting in an aggregate purchase price of $750 million.

Subject to the terms and conditions of the Investment Agreement, among other things, the Company and the Investor also agreed that the Company would issue, sell and deliver to the Investor:

- 105,000 shares of a new Series B-2 Convertible Preferred Stock of the Company, no par value per share (“II-VI Series B-2 Convertible Preferred Stock,” and together with the II-VI Series B-1 Convertible Preferred Stock, “New II-VI Convertible Preferred Stock”), for a purchase price per share equal to the Equity Per Share Price, resulting in an aggregate purchase price of $1.1 billion, immediately prior to Closing; and

- immediately prior to Closing, if elected by the Company and agreed by the Investor, up to an additional 35,000 shares of II-VI Series B-2 Convertible Preferred Stock (the "Upsize Shares") for a purchase price per share equal to the Equity Per Share Price, resulting in an aggregate maximum purchase price for the Upsize Shares of $350 million.

Following the Company’s provision of notice to the Investor of its election to offer the Upsize Shares, the Investor informed the Company on June 8, 2021 of its agreement to purchase the Upsize Shares from the Company immediately prior to the Closing, increasing the Investor’s total equity commitment to II-VI pursuant to the Investment Agreement to $2.2 billion.

Human Capital

Our mission is “Enabling the world to be safer, healthier, closer, and more efficient.”

Our vision is “A world transformed through innovative materials vital to a better life today and the sustainability of future generations.”

Our core values are: Integrity, Collaboration, Accountability, Respect, and Enthusiasm (I CARE).

Our people are essential to fulfilling our mission and working toward our vision.

As a result, our human capital strategies are core to the long-term success of the Company.

As of June 30, 2021, the Company employed approximately 23,000 employees worldwide.

| Direct production | | | 15,833 | | | 69% | | |

| General administration | | | 2,852 | | | 12% | | |

We believe that our efforts in managing our workforce have been effective, as evidenced by a strong culture and a good relationship between the Company and our employees.

- *Our People*.

Our people are critical to our continued success.

We provide a workplace that develops, supports, and motivates our employees.

In FY21, we again participated in the Gallup Employee Engagement Survey.

We believe Gallup’s employee engagement survey questions and resources are an effective way to gauge our progress to create a stronger, more engaged workplace.

Gallup provides comparative data from numerous studies over many years linked to organizational performance, proven consistent survey methodology, and actionable guidance at both the local and enterprise level.

We had a 94% participation rate and an engagement mean of 4.16 out of 5.00.

The responses to each of

the 12 questions within Gallup’s survey demonstrated improvement by us from our prior survey conducted in FY19.

Action plans are created across the globe to continue to improve our engagement level.

*•Employee Safety*.

It is our highest priority to keep our employees, customers, and suppliers safe, as the health and safety of our workforce is fundamental to the success of our business.

Our telephone number is 724-352-4455.

Acquisition of Finisar Corporation

On September 24, 2019 (the “Closing Date”), the Company completed its acquisition of Finisar Corporation ("Finisar"), a global technology leader for subsystems and components for fiber-optic communications.

Segment and Geographic Reporting to our Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Beginning on October 1, 2019, the results of Finisar have been allocated to the Photonic Solutions and Compound Semiconductors Segments.

Segment and Geographic Reporting to our Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K and are incorporated herein by reference.

Effective July 1, 2019, the Company realigned its organizational structure into two reporting segments for the purpose of making operational decisions and assessing financial performance: (i) Photonic Solutions and (ii) Compound Semiconductors.

Refer to Note 14.

Segment and Geographic Reporting for further information on reporting segments.

Employees

The table below summarizes the number of our employees as of June 30, 2020, in the main functions.

We have a long-standing practice of encouraging active employee participation in areas of operations and quality management.

We believe our relations with our employees are good.

We reward substantially all of our employees with some form of variable compensation based on achievement of performance goals.

There are approximately 161 employees located in the United States and the Philippines who are covered under collective bargaining agreements.

The Company’s five-year collective bargaining agreement in the United States is up for renewal in January 2021, and the Company's two-year collective bargaining agreement in the Philippines is up for renewal in June 2021.

There are 450 employees of II-VI in China who work under contract manufacturing arrangements for a customer of the Company, Corning Incorporated.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Direct production | | | | | | 15,101 | | | | | | 66% | | |

| General administration | | | | | | 3,810 | | | | | | 18% | | |

Among the raw materials we use are zinc, selenium, zinc selenide, zinc sulfide, hydrogen selenide, hydrogen sulfide, arsine, phosphine, hydrogen, silane, tellurium, yttrium oxide, aluminum oxide, iridium, platinum, bismuth, silicon, thorium fluoride, antimony, graphite, gallium arsenide, gallium nitride, indium phosphide, copper, gold, nickel, germanium, molybdenum, quartz, optical glass, silicon carbide, and carbon in its diamond form.

As discussed in greater detail in Item 1A – Risk Factors of this Annual Report on Form 10-K, significant failure of our suppliers to deliver sufficient quantities of necessary high-quality raw materials to our specifications on a timely basis could have a materially adverse effect on our results of operations.

These segments, and the business units within the segments, are reflected in the Company's current organizational chart below:


| | | | Transceivers | | | •Pluggable transceivers for Ethernet and fiber channel applications in cloud and enterprise datacenter applications | | |

| | | | Aerospace & Defense | | | •Precision optical assemblies, objectives, infrared optics, thin-film coatings, and optical materials •Optical solutions for critical and complex design, engineering, and production challenges in defense and aerospace | | |

Materials Processing Market

II-VI is also driving innovation with a direct-diode laser engine small enough to be mounted on a robotic arm so that the end user can apply square beams directly to the workpiece at wavelengths optimized to process specific metals or alloys.

LiDAR sensors are also expected to be embedded in autonomous vehicles.

Most governmental programs are subject to funding approval and can be modified or terminated without warning by a legislative or administrative body.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Coherent Optics | | | | | | | | |

| | | | InP Devices | | | Manufacturers of transceivers | | | | | |

The development of our products and manufacturing processes is largely based on proprietary technical know-how and expertise.

We rely on a combination of contract provisions, trade secret laws, invention disclosures, and patents to protect our proprietary rights.

We have entered into selective intellectual property licensing agreements.

We have asserted in the past, and expect that we will continue to assert, as well as vigorously protect, our intellectual property rights.

For these same periods, externally funded research and development expenditures were $16.4 million, $14.7 million, and $12.7 million, respectively, and were included in cost of goods sold in the Consolidated Statements of Earnings (Loss).

for the fiscal year ended June 30, [removed: 2020][added: 2021]

| Pennsylvania | | | | | | 25-1214948 | | | [removed: | | |]

| (State or other jurisdiction of incorporation or organization) | | | | | | (I.R.S. Employer Identification No.) | | | [removed: | | |]

| 375 Saxonburg Blvd. | | | | | | | | | [removed: | | |]

| Saxonburg, PA | | | | | | 16056 | | | [removed: | | |]

| (Address of principal executive offices) | | | | | | (Zip code) | | | [removed: | | |]

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T [added: (§ 232.405 of this chapter)] during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Aggregate market value of outstanding Common Stock, no par value, held by non-affiliates of the Registrant at December 31, [removed: 2019,] [added: 2020,] was approximately [removed: $3,031,733,938] [added: $7,871,289,598] based on the closing sale price reported on the Nasdaq Global Select Market.

Number of outstanding shares of Common Stock, no par value, at August [removed: 20, 2020,] [added: 16, 2021,] was [removed: 103,668,355.][added: 105,718,326.]

Portions of the registrant’s definitive proxy statement, which will be issued in connection with the [removed: 2020] [added: 2021] Annual Meeting of Shareholders of II-VI Incorporated, are incorporated by reference into Part III of this Annual Report on Form 10-K.

The statements in this Annual Report on Form 10-K that are not purely [removed: historical, but] [added: historical] are forward-looking statements, including, without limitation, statements regarding our expectations, assumptions, beliefs, intentions or strategies regarding the future.

[removed: The following risk factors,] [added: “Risk Factors” and summarized below under “Risk Factor Summary,”] among others, in some cases have affected and in the future could affect our financial performance and actual results, and could cause actual results for fiscal [removed: 2021] [added: 2022] and beyond to differ materially from those expressed or implied in any forward-looking statements included in this Annual Report on Form 10-K or otherwise made by our [removed: management:][added: management.]

- Foreign currency risk may negatively affect [removed: our revenues, cost of sales and operating margins,] [added: us] and could result in foreign exchange losses.

- We may be unable to successfully implement our acquisitions strategy or integrate acquired companies and [removed: personnel with existing operations.][added: personnel.]

- Our [removed: future success depends on continued international sales, and our] global operations are complex and present multiple challenges to manage.

- We are subject to complex and rapidly changing import and export [removed: regulations which could limit our sales and decrease our profitability.][added: regulations.]

- Changes in trade [removed: policies, such as increased import duties,] [added: policies] could increase the [removed: cost] [added: costs] of goods imported into the United States or China.

- We may not be able to settle conversions of our convertible senior notes in cash or repurchase the notes [removed: in accordance with their terms.][added: when required.]

- There are limitations on the protection of our intellectual [removed: property and we may from time to time be involved in costly intellectual property litigation or indemnification.][added: property.]

- Changes in laws and regulations governing data privacy and data protection could have a material adverse impact on [removed: our business.][added: us.]

- We have a substantial amount of debt, which could adversely affect [removed: our business, financial condition, or results of operations] [added: us] and prevent us from fulfilling [removed: its debt-related] [added: our] obligations.

- Natural disasters or other global or regional catastrophic events could [removed: disrupt our operations, give rise to substantial environmental hazards, and] adversely affect [removed: our results.][added: us.]

- Our success depends on our ability to attract, [removed: retain] [added: retain,] and develop key personnel and requires [removed: continued] good [removed: relations with our employees.][added: employee relations.]

- Failure to accurately forecast our revenues could result in additional [removed: charges for obsolete or excess inventories or noncancelable purchase commitments.][added: charges.]

- [removed: Our stock price has] [added: The trading prices for our securities have] been volatile in the past and may be volatile in the future.

- Our ability to declare and pay dividends on our capital stock may be [removed: limited, including by the terms of our existing Credit Agreement.][added: limited.]

- [removed: The Mandatory Convertible Preferred Stock] [added: Trading in preferred stock that we have issued] may adversely affect the market price of our common stock.

- Our common stock is subordinate to our existing and future [removed: indebtedness; the Mandatory Convertible Preferred Stock, when issued;] [added: indebtedness] and any [removed: other] preferred stock we may [removed: issue in the future.][added: issue.]

Our [removed: Mandatory Convertible Preferred Stock] [added: preferred stock] ranks junior to all of our and our subsidiaries’ consolidated liabilities.

- Our board of directors can issue, without approval of [removed: the holders of] our [removed: common stock,] [added: stockholders,] preferred stock with [removed: voting and conversion] rights that could adversely affect [removed: the voting power of the] holders of our common [removed: stock, the rights of holders of shares of our capital stock or the market price of our capital] stock.

- Reports published by securities or industry [removed: analysts, freelance bloggers] [added: analysts] and [removed: credit rating agencies, including projections in those reports that exceed our actual results,] [added: others] could adversely affect our share price and trading volume.

- Regulatory actions may adversely affect the trading price and liquidity of [removed: the] [added: our] Mandatory Convertible Preferred Stock.

- Holders of Mandatory Convertible Preferred Stock have no voting [removed: rights with respect to the Mandatory Convertible Preferred Stock,] [added: rights,] except under limited circumstances.

The [removed: foregoing and additional] risk factors [removed: are] described in more detail herein under Item 1A.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

Risk Factor Summary

The following is a summary of the material risks and uncertainties that could cause our business, financial condition or operating results to be adversely impacted.

We encourage you to carefully review the full risk factors contained in Item 1A.

“Risk Factors” herein in their entirety for additional information regarding these risks and uncertainties.

*Risks Relating to Our Business and Our Industry*

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

- Global economic downturns may adversely affect us.

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

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

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

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

- We may encounter increased competition.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

- Widespread health crises, including the global novel coronavirus (COVID-19) pandemic, could materially and adversely affect our business, financial condition and results of operations.

- Global economic downturns, including any downturn related to COVID-19, may adversely affect our business, operating results and financial condition.

- Some systems that use our products are complex in design, and our products may contain defects that are not detected until deployed, which could increase our costs, reduce our revenues, cause us to lose key customers, and may expose us to litigation related to our products.

- Although II-VI continues to expect that its acquisition of Finisar will result in cost savings, synergies, and other benefits, the combined company may not realize those benefits, or be able to retain those benefits even if realized.

The inclusion of companies, such as Huawei, on the U.S. Entity List, could decrease our access to customers and markets and materially impact our revenues in the aggregate.

- Any inability to access financial markets from time to time to raise required capital, finance our working capital requirements or our acquisition strategies, or otherwise to support our liquidity

needs could negatively impact our ability to finance our operations, meet certain obligations or implement our growth strategy.

- Our credit agreement restricts our operations, particularly our ability to respond to changes or to take certain actions regarding our business.

- We may encounter increased competition and we may fail to accurately estimate our competitors’ or our customers’ willingness and capability to backward integrate into our competencies and thereby displace us.

- Data breach incidents and breakdown of information and communication technologies could disrupt our operations and impact our financial results.

- We contract with a number of large end-user service providers and product companies that have considerable bargaining power, which may require us to agree to terms and conditions that could have an adverse effect on our business or ability to recognize revenues.

- We depend on large purchases from a few significant customers, and any loss, cancellation, reduction, or delay in purchases by these customers could harm our business.

- Provisions in our Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) and Amended and Restated By-Laws (the “By-Laws”) and the Pennsylvania Business Corporation Law (the “BCL”) may delay or prevent our acquisition by a third party, which could also reduce the market price of our capital stock.

- Because we do not currently intend to pay dividends, holders will benefit from an investment in our common stock only if it appreciates in value and by the intended anti-dilution actions of our share-buyback program.

- We depend on our subsidiaries for cash to fund our operations and expenses, including future dividend payments with respect to the Mandatory Convertible Preferred Stock.

“Risk Factors”.

Information regarding our principal U.S. properties at June 30, [removed: 2020,] [added: 2021,] is set forth below:

| [removed: Sunnyvale, CA] [added: China] | | | | | | Manufacturing, Research and Development, and [removed: Corporate Administrative Offices] [added: Distribution] | | | | | | [added: Compound Semiconductors and] Photonic Solutions | | | | | | [removed: 112,000] [added: 3,138,000] | | | | | | [added: Owned and] Leased | | |

| Fremont, CA | | | | | | Manufacturing and Research and Development | | | | | | Compound Semiconductors | | | | | | [removed: 107,000] [added: 128,000] | | | | | | Leased | | |

Information regarding our principal foreign properties at June 30, [removed: 2020,] [added: 2021,] is set forth below:

| [removed: China] [added: Germany] | | | | | | [removed: Manufacturing, Research and Development,] [added: Manufacturing] and Distribution | | | | | | Compound Semiconductors and Photonic Solutions | | | | | | [removed: 3,232,363] [added: 101,000] | | | | | | Owned and Leased | | |

| Vietnam | | | | | | Manufacturing | | | | | | Compound Semiconductors and Photonic Solutions | | | | | | [removed: 189,000] [added: 211,000] | | | | | | Owned and Leased | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

The Company’s common stock is traded on the Nasdaq Global Select Market under the symbol “IIVI.” As of August [removed: 20, 2020,] [added: 16, 2021,] there were approximately [removed: 839] [added: 806] holders of record of our common stock.

Dividends on the Company’s [added: Series A] Mandatory Convertible Preferred Stock will be payable on a cumulative basis when, as and if declared by our board of directors, or an authorized committee of our board of directors, at an annual rate of [removed: 6.00%] [added: 6%] of the liquidation preference of $200.00 per share.

The Company purchased 1,414,900 shares of its common stock for approximately [removed: $49.9] [added: $50] million pursuant to this authorization.

During [removed: each of] the fiscal [removed: years] [added: year] ended June 30, [removed: 2020 and June 30, 2019,] [added: 2020,] the Company purchased 50,000 shares of its common stock for [removed: $1.6] [added: $2] million under this program.

As of June 30, [removed: 2020,] [added: 2021,] the Company has cumulatively purchased 1,416,587 shares of its common stock pursuant to the Program for approximately [removed: $22.3] [added: $22] million.

The dollar value of shares as of June 30, [removed: 2020] [added: 2021] that may yet be purchased under the Program is approximately [removed: $27.7] [added: $28] million.

The following graph compares cumulative total shareholder return on the Company’s common stock with the cumulative total shareholder return of the Nasdaq Composite Index and with a peer group of companies constructed by the Company for the period from June 30, [removed: 2015,] [added: 2016,] through June 30, [removed: 2020.][added: 2021.]

The Company’s current fiscal year peer group includes [removed: Cabot Microelectronics Corporation, Franklin Electric Co.] [added: CMC Materials] Inc., [removed: MKS Instruments,] [added: Coherent,] Inc., [removed: Silicon Laboratories] [added: Corning Incorporated, Franklin Electric Co.,] Inc., Lumentum Holdings Inc., [removed: Coherent, Inc.] [added: MKS Instruments Inc.,] and [removed: Corning Incorporated.][added: Silicon Laboratories, Inc.]

[removed: ][added: ]

Dividends on the Company’s Series B Convertible Preferred Stock will be payable on a cumulative basis when, as and if declared by our board of directors, or an authorized committee of our board of directors, at an annual rate of 5%, subject to increase if II-VI defaults on payment obligation with respect to these shares, not to exceed 14% per annum.

Until the fourth anniversary of the issuance of the Series B Convertible Preferred Stock, dividends are payable solely in-kind.

After the fourth anniversary, dividends are payable, at the Company’s option, in cash, in-kind or as a combination of both.

The Company did not repurchase shares pursuant to this Program during the fiscal year ended June 30, 2021.

In our Annual Report on Form 10-K for our fiscal year ended June 30, 2019, our fiscal year peer group included Finisar.

Finisar has been excluded from the current fiscal year peer group as a result of our acquisition of Finisar in September 2019.

| Year Ended June 30, | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2016] [added: 2017] | | |

| Net revenues | | | | | | $ | [removed: 2,380,071] [added: 3,105,891] | | | | | $ | [removed: 1,362,496] [added: 2,380,071] | | | | | $ | [removed: 1,158,794] [added: 1,362,496] | | | | | $ | [removed: 972,046] [added: 1,158,794] | | | | | $ | [removed: 827,216] [added: 972,046] | |

| Net earnings (loss) | | | | | | [removed: (67,029)] [added: 297,552] | | | | | | [removed: 107,517] [added: (67,029)] | | | | | | [removed: 88,002] [added: 107,517] | | | | | | [removed: 95,274] [added: 88,002] | | | | | | [removed: 65,486] [added: 95,274] | | |

| Basic earnings (loss) per share | | | | | | [removed: (0.79)] [added: 2.50] | | | | | | [removed: 1.69] [added: (0.79)] | | | | | | [removed: 1.41] [added: 1.69] | | | | | | [removed: 1.52] [added: 1.41] | | | | | | [removed: 1.07] [added: 1.52] | | |

| Diluted earnings (loss) per share | | | | | | [removed: (0.79)] [added: 2.37] | | | | | | [removed: 1.63] [added: (0.79)] | | | | | | [removed: 1.35] [added: 1.63] | | | | | | [removed: 1.48] [added: 1.35] | | | | | | [removed: 1.04] [added: 1.48] | | |

| Diluted weighted average shares outstanding | | | | | | [removed: 84,828] [added: 115,034] | | | | | | [removed: 65,804] [added: 84,828] | | | | | | [removed: 65,133] [added: 65,804] | | | | | | [removed: 64,507] [added: 65,133] | | | | | | [removed: 62,909] [added: 64,507] | | |

| June 30, | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2016] [added: 2017] | | |

| Working capital | | | | | | $ | [removed: 1,116,076] [added: 2,297,805] | | | | | $ | [removed: 542,348] [added: 1,116,076] | | | | | $ | [removed: 525,370] [added: 542,348] | | | | | $ | [removed: 517,344] [added: 525,370] | | | | | $ | [removed: 411,721] [added: 517,344] | |

| Total assets | | | | | | [removed: 5,234,714] [added: 6,512,650] | | | | | | [removed: 1,953,773] [added: 5,234,714] | | | | | | [removed: 1,761,661] [added: 1,953,773] | | | | | | [removed: 1,477,297] [added: 1,761,661] | | | | | | [removed: 1,211,981] [added: 1,477,297] | | |

| Long-term debt | | | | | | [removed: 2,186,092] [added: 1,313,091] | | | | | | [removed: 443,163] [added: 2,186,092] | | | | | | [removed: 419,013] [added: 443,163] | | | | | | [removed: 322,022] [added: 419,013] | | | | | | [removed: 215,307] [added: 322,022] | | |

| Total debt | | | | | | [removed: 2,255,342] [added: 1,375,141] | | | | | | [removed: 466,997] [added: 2,255,342] | | | | | | [removed: 439,013] [added: 466,997] | | | | | | [removed: 342,022] [added: 439,013] | | | | | | [removed: 235,307] [added: 342,022] | | |

| Retained earnings | | | | | | [removed: 876,552] [added: 1,136,777] | | | | | | [removed: 943,581] [added: 876,552] | | | | | | [removed: 836,064] [added: 943,581] | | | | | | [removed: 748,062] [added: 836,064] | | | | | | [removed: 652,788] [added: 748,062] | | |

| Shareholders' equity | | | | | | [removed: 2,076,803] [added: 3,406,170] | | | | | | [removed: 1,133,209] [added: 2,076,803] | | | | | | [removed: 1,024,311] [added: 1,133,209] | | | | | | [removed: 900,563] [added: 1,024,311] | | | | | | [removed: 782,338] [added: 900,563] | | |

| Mezzanine equity | | | | | | 726,178 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of June 30, [removed: 2020.][added: 2021.]

Management excluded from the scope of its assessment of internal control over financial reporting the internal controls of [removed: Finisar Corporation,] [added: Ascatron,] which was acquired in [removed: September 2019.][added: August 2020, and Innovion, which was acquired in October 2020.]

The recent [removed: acquisition] [added: acquisitions] excluded from management’s assessment of internal controls over financial reporting represented approximately [removed: $3.1 billion] [added: $141.4 million] and [removed: $2.8 billion] [added: $117.4 million] of total assets and net assets, respectively, as of June 30, [removed: 2020,] [added: 2021] and approximately [removed: $938.4] [added: $22.4] million and [removed: $94.6] [added: $2.5] million of total revenues and net loss, respectively, for the fiscal year then ended.

Based on the evaluation, management concluded that as of June 30, [removed: 2020,] [added: 2021,] the Company’s internal controls over financial reporting were effective.

Ernst & Young LLP, an independent registered public accounting firm, has issued its report on the effectiveness of our internal control over financial reporting as of June 30, [removed: 2020.][added: 2021.]

We have audited the accompanying consolidated balance sheets of II-VI Incorporated and Subsidiaries (the Company) as of June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended June 30, [removed: 2020,] [added: 2021,] and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended June 30, [removed: 2020,] [added: 2021,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, [removed: 2020,] [added: 2021,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August [removed: 26, 2020] [added: 20, 2021] expressed an unqualified opinion thereon.

[removed: Those standards require that we plan and perform the] audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Critical Audit [removed: Matter][added: Matters]

The critical audit [removed: matter] [added: matters] communicated below [removed: is a matter] [added: are matters] arising from the current period audit of the financial statements that [removed: was] [added: were] communicated or required to be communicated to the audit committee and that: (1) [removed: relates] [added: relate] to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of [removed: the] critical audit [removed: matter] [added: matters] does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matter] [added: matters] below, providing [removed: a] separate [removed: opinion] [added: opinions] on the critical audit [removed: matter] [added: matters] or on the accounts or disclosures to which [removed: it relates.][added: they relate.]

We have audited II-VI Incorporated and Subsidiaries’ internal control over financial reporting as of June 30, [removed: 2020,] [added: 2021,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, II-VI Incorporated and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of June 30, [removed: 2020,] [added: 2021,] based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of [removed: Finisar] [added: Ascatron AB (“Ascatron”) and INNOViON] Corporation [removed: (“Finisar”),] [added: (“Innovion”),] which [removed: is] [added: are] included in the June 30, [removed: 2020] [added: 2021] consolidated financial statements of the Company and constituted [removed: $3.1 billion] [added: $141.4 million] and [removed: $2.8 billion] [added: $117.4 million] of total and net assets, respectively, as of June 30, [removed: 2020] [added: 2021] and [removed: $938.4] [added: $22.4] million and [removed: $94.6] [added: $2.5] million of revenues and net loss, respectively, for the fiscal year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of [removed: Finisar.][added: Ascatron and Innovion.]

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended June 30, [removed: 2020,] [added: 2021,] and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) and our report dated August [removed: 26, 2020] [added: 20, 2021] expressed an unqualified opinion thereon.

| [removed: June] [added: Year Ended June] 30, | | | | | | [added: | | | | | |] 2020 | | | | | | 2019 | | |

| Cash and [removed: cash equivalents |] [added: Cash Equivalents at Beginning of Period] | | | | | [removed: $] | 493,046 | | | | | [removed: $] | 204,872 | | [added: | | | | 247,038 | | |]

| Accounts receivable - less allowance for doubtful accounts of [removed: $1,698] [added: $924] at June 30, [removed: 2020] [added: 2021] and [removed: $1,292] [added: $1,698] at June 30, [removed: 2019] [added: 2020] | | | | | | [removed: 598,124] [added: 658,962] | | | | | | [removed: 269,642] [added: 598,124] | | |

| Inventories | | | | | | [removed: 619,810] [added: 695,828] | | | | | | [removed: 296,282] [added: 619,810] | | |

| Prepaid and refundable income taxes | | | | | | [removed: 12,279] [added: 13,095] | | | | | | [removed: 11,778] [added: 12,279] | | |

| Prepaid and other current assets | | | | | | [removed: 65,710] [added: 67,617] | | | | | | [removed: 30,337] [added: 65,710] | | |

| Total Current Assets | | | | | | [removed: 1,788,969] [added: 3,027,394] | | | | | | [removed: 812,911] [added: 1,788,969] | | |

| Property, plant & equipment, net | | | | | | [removed: 1,214,772] [added: 1,242,906] | | | | | | [removed: 582,790] [added: 1,214,772] | | |

| Goodwill | | | | | | [removed: 1,239,009] [added: 1,296,727] | | | | | | [removed: 319,778] [added: 1,239,009] | | |

| Other intangible assets, net | | | | | | [removed: 758,368] [added: 718,460] | | | | | | [removed: 139,324] [added: 758,368] | | |

| Deferred income taxes | | | | | | [removed: 22,938] [added: 33,498] | | | | | | [removed: 8,524] [added: 22,938] | | |

| Total Assets | | | | | | $ | [removed: 5,234,714] [added: 6,512,650] | | | | | $ | [removed: 1,953,773] [added: 5,234,714] | |

| [removed: Liabilities] [added: Liabilities. Mezzanine Equity] and Shareholders' Equity | | | | | | | | | | | | | | |

| Current portion of long-term debt | | | | | | $ | [removed: 69,250] [added: 62,050] | | | | | $ | [removed: 23,834] [added: 69,250] | |

| Accounts payable | | | | | | [removed: 268,773] [added: 294,486] | | | | | | [removed: 104,462] [added: 268,773] | | |

| Accrued compensation and benefits | | | | | | [removed: 157,557] [added: 181,491] | | | | | | [removed: 71,847] [added: 157,557] | | |

| Operating lease current liabilities | | | | | | [removed: 24,634] [added: 25,358] | | | | | | [removed: —] [added: 24,634] | | |

| Accrued income taxes payable | | | | | | [removed: 33,341] [added: 20,295] | | | | | | [removed: 20,476] [added: 33,341] | | |

| Other accrued liabilities | | | | | | [removed: 119,338] [added: 145,909] | | | | | | [removed: 49,944] [added: 119,338] | | |

| Total Current Liabilities | | | | | | [removed: 672,893] [added: 729,589] | | | | | | [removed: 270,563] [added: 672,893] | | |

| Long-term debt | | | | | | [removed: 2,186,092] [added: 1,313,091] | | | | | | [removed: 443,163] [added: 2,186,092] | | |

| Deferred income taxes | | | | | | [removed: 45,551] [added: 73,962] | | | | | | [removed: 23,913] [added: 45,551] | | |

| Operating lease liabilities | | | | | | [removed: 94,701] [added: 125,541] | | | | | | [removed: —] [added: 94,701] | | |

Those standards require that we plan and perform the

| Accounting for Series A Mandatory Convertible Preferred Stock | | | | | |

| *Description of the Matter* | | | As described in Note 11 to the consolidated financial statements, on July 7, 2020, the Company issued shares of Series A Mandatory Convertible Preferred Stock. Upon conversion, on the mandatory conversion date, each outstanding share of Series A Mandatory Convertible Preferred Stock, unless previously converted, will automatically convert into a number of shares of the Company’s common stock determined based on the market value of the Company’s common stock on the mandatory conversion date. Auditing the Company’s accounting for the Series A Mandatory Convertible Preferred Stock was complex due to the significant estimation uncertainty involved in estimating the future market value of the Company’s common stock on the mandatory conversion date, which was used to determine whether the Series A Mandatory Convertible Preferred Stock should be classified within shareholders’ equity on the consolidated balance sheet as well as the related impact to the Company’s earnings per share. The Company used a Monte Carlo simulation model to estimate the future market value of its common stock on the mandatory conversion date, which considers inputs such as volatility and cost of equity, which are forward-looking and could be affected by future economic and market conditions. | | |

| *How We Addressed the Matter in Our Audit* | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls relating to management’s accounting for the Series A Mandatory Convertible Preferred Stock. For example, we tested controls that address the risks of material misstatement relating to the estimation of the future market value of the Company’s common stock on the mandatory conversion date, including management’s review of the estimation methodology and significant inputs. To test the Company’s accounting for the Series A Mandatory Convertible Preferred Stock, our audit procedures included, among others, reading the relevant agreements and the Company’s accounting analysis and evaluating the Company’s conclusions as compared to the relevant accounting guidance. To test the estimated future market value of the Company’s common stock, our audit procedures included, among others, assessing the appropriateness of the estimation methodology used and evaluating the significant inputs. We compared the forecasted volatility of the Company’s common stock price to its historical volatility and compared the cost of equity to prior valuations performed by the Company. We also performed sensitivity analyses to evaluate the changes in the estimated future market value of the Company’s common stock that would result from changes in the significant inputs. We involved our valuation specialist to assist in evaluating the methodology used, to test certain significant inputs and to perform comparative calculations. | | |

| Accounting for Series B Convertible Preferred Stock | | | | | |

| *Description of the Matter* | | | As described in Notes 3, 11 and 16 to the consolidated financial statements, the Company entered into an investment agreement, dated March 25, 2021, and amended and restated as of March 30, 2021, pursuant to which: (1) on March 31, 2021, the Company issued shares of Series B-1 Convertible Preferred Stock; and (2) the Company agreed to issue, immediately prior to the closing of the Company’s acquisition of Coherent, Inc., additional shares of Series B-2 Convertible Preferred Stock. The Series B-1 and B-2 Convertible Preferred Stock are contingently redeemable at the option of the holder on or after the tenth anniversary of the issuance or upon a certain change in control. The Company has concluded that (1) the obligation to issue the shares of Series B-1 Convertible Preferred Stock was required to be measured at fair value as an asset or liability with changes in fair value recognized in earnings; and (2) the obligation to issue the shares of Series B-2 Convertible Preferred Stock is an embedded feature that does not require bifurcation for separate accounting. Auditing the Company’s accounting for the obligations to issue shares of Series B-1 and B-2 Convertible Preferred Stock was complex due to the significant judgments made by management in determining whether each obligation should be classified and measured as an asset or liability on the consolidated balance sheet or comprises an embedded feature requiring bifurcation and separate accounting. | | |

| *How We Addressed the Matter in Our Audit* | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls relating to management’s accounting for the Series B Convertible Preferred Stock, including management’s review of the relevant agreements and evaluation of the accounting guidance. To test the Company’s accounting for the obligations to issue shares of Series B-1 and B-2 Convertible Preferred Stock, our audit procedures included, among others, reading the relevant agreements and the Company’s accounting analysis, assessing the pertinent provisions of the Series B-1 and B-2 Convertible Preferred Stock, and evaluating the Company’s conclusions as compared to the relevant accounting guidance. | | |

August 20, 2021

August 20, 2021

| Cash and cash equivalents | | | | | | $ | 1,591,892 | | | | | $ | 493,046 | |

| Other assets | | | | | | 193,665 | | | | | | 210,658 | | |

| Mezzanine Equity | | | | | | | | | | | | | | |

| Series B redeemable convertible preferred stock, no par value, 5% cumulative; authorized - 215,000 shares; issued - 75,000 shares at June 30, 2021, redemption value - $759,583 | | | | | | 726,178 | | | | | | — | | |

| | | | | | | 3,624,636 | | | | | | 2,276,116 | | |

| Less: Dividends on Preferred Stock | | | | | | $ | 37,231 | | | | | $ | — | | | | | $ | — | |

| Net Earnings (Loss) available to the Common Shareholder | | | | | | $ | 260,321 | | | | | $ | (67,029) | | | | | $ | 107,517 | |

| Change in fair value of interest rate swap, net of taxes of $3,372 and $0 for the years ended June 30, 2021 and 2020, respectively | | | | | | 12,312 | | | | | | (44,085) | | | | | | — | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Share-based and deferred compensation activities | | | | | | 2,512 | | | | | | 102,737 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (284) | | | | | | (19,153) | | | | | | 83,584 | | | | | | — | | | | | | — | | |

| Shares issued in underwritten public offering | | | | | | 10,698 | | | | | | 438,589 | | | | | | 2,300 | | | | | | 445,319 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 883,908 | | | | | | — | | | | | | — | | |

| Series B shares issued in March 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 75 | | | | | | 716,087 | | |

| Accretion to redemption value of Series B shares issued in March 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (508) | | | | | | — | | | | | | — | | | | | | (508) | | | | | | — | | | | | | 508 | | |

| Dividends | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (36,819) | | | | | | — | | | | | | — | | | | | | (36,819) | | | | | | — | | | | | | 9,583 | | |

| Balance - June 30, 2021 | | | | | | 119,127 | | | | | | 2,028,273 | | | | | | 2,300 | | | | | | 445,319 | | | | | | 14,267 | | | | | | 1,136,777 | | | | | | (13,640) | | | | | | (218,466) | | | | | | 3,406,170 | | | | | | 75 | | | | | | 726,178 | | |

| Net earnings (loss) | | | | | | $ | 297,552 | | | | | $ | (67,029) | | | | | $ | 107,517 | |

| Accrued compensation and benefits | | | | | | 23,934 | | | | | | — | | | | | | — | | |

| Other investing activities | | | | | | 7,774 | | | | | | (5,804) | | | | | | (3,787) | | |

| Proceeds from issuance of common shares | | | | | | 460,000 | | | | | | — | | | | | | — | | |

| Proceeds from issuance of Series A preferred shares | | | | | | 460,000 | | | | | | — | | | | | | — | | |

| Proceeds from issuance of Series B preferred shares | | | | | | 750,000 | | | | | | — | | | | | | — | | |

| Equity issuance costs | | | | | | (58,596) | | | | | | — | | | | | | — | | |

| Payment of dividends | | | | | | (20,319) | | | | | | — | | | | | | — | | |

The Company reviews its

On August 20, 2020, the Company acquired all of the outstanding shares of Ascatron AB ("Ascatron"), located in Sweden and on October 1, 2020, the Company acquired the remaining 6.1% interest in INNOViON Corporation ("Innovion").

Series A Mandatory Convertible Preferred Stock.

The II-VI Series A Mandatory Convertible Preferred Stock is initially measured at fair value, less underwriting discounts and commissions and offering expenses paid by the Company.

The Preferred Stock’s dividends are cumulative, at 6% per annum.

Series B Convertible Preferred Stock. The II-VI Series B-1 Convertible Preferred Stock is initially measured at fair value less issuance costs, accreted to its redemption value over a ten-year period (using the effective interest method) with such accretion accounted for as deemed dividends and reductions to Net Earnings Available to the Common Shareholder.

customer or receipt of the product by the customer and without significant judgments.

| | | | Valuation of customer relationship and technology intangible assets in the acquisition of Finisar Corporation | | |

| *Description of the Matter* | | | As discussed in Note 3 to the consolidated financial statements, during the year ended June 30, 2020, the Company completed the acquisition of Finisar Corporation ("Finisar") for a total purchase price of approximately $2,908.5 million. The acquisition was accounted for as a business combination. The consideration paid in the acquisition must be allocated to the acquired assets and liabilities assumed generally based on their fair value with the excess of the purchase price over those fair values allocated to goodwill. Auditing the Company’s accounting for its acquisition of Finisar was complex due to the significant estimation uncertainty involved in estimating the fair value of certain customer relationship and technology intangible assets. The total fair value ascribed to customer relationship and technology intangible assets amounted to $323.8 million and $334.7 million, respectively. The Company used the multi-period excess earnings method and the relief from royalty method to value the customer relationship and technology intangible assets, respectively. The significant assumptions used to estimate the fair value of customer relationships included the forecasted revenue growth and projected operating expenses inclusive of expected synergies, including future cost savings, and other benefits expected to be achieved by combining the Company and Finisar. The significant assumptions used to estimate the fair value of technology included the forecasted revenue growth and an estimated royalty rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions. | | |

| *How We Addressed the Matter in Our Audit* | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its accounting for the acquisition of Finisar. For example, we tested controls that address the risks of material misstatement relating to the valuation of the customer relationship and technology intangible assets, including management’s review of the methods and significant assumptions used to develop such estimates. To test the estimated fair value of the acquired customer relationship and technology intangible assets, our audit procedures included, among others, assessing the appropriateness of the valuation methodologies used, evaluating the significant assumptions discussed above, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For the forecasted revenue growth and projected operating expenses inclusive of expected synergies, including future cost savings, and other benefits expected to be achieved by combining the Company and Finisar, we compared the financial projections to current industry and economic trends, the historic financial performance of the acquired business, the Company’s history with other acquisitions, and forecasted performance of guideline public companies. We also performed sensitivity analyses to evaluate the changes in the fair value of the intangible assets that would result from changes in the significant assumptions. We involved our valuation specialist to assist in evaluating the methodologies used to estimate the fair value of the customer relationship and technology intangible assets and to test certain significant assumptions, including the royalty rate, which included a comparison of the selected royalty rate to a range of royalty rates we identified by performing an independent search of comparable licensing agreements. | | |

August 26, 2020

| Investments | | | | | | 73,767 | | | | | | 76,208 | | |

| Other assets | | | | | | 136,891 | | | | | | 14,238 | | |

| | | | | | | 2,276,116 | | | | | | 1,301,783 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance - June 30, 2017 | | | | | | 74,081 | | | | | | $ | 269,638 | | | | | $ | (13,778) | | | | | $ | 748,062 | | | | | (10,940) | | | | | | $ | (103,359) | | | | | $ | 900,563 | | | | | | | | | | | | | |

| Equity portion of convertible debt, net of issuance costs of $1,694 | | | | | | — | | | | | | 56,406 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 56,406 | | | | | | | | | | | | | | |

| Share-based and deferred compensation activities | | | | | | 622 | | | | | | 30,662 | | | | | | — | | | | | | — | | | | | | (158) | | | | | | (7,224) | | | | | | 23,438 | | | | | | | | | | | | | | |

| Purchases of treasury stock | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (50) | | | | | | (1,625) | | | | | | (1,625) | | | | | | | | | | | | | | |

| Purchases of technology intangible assets | | | | | | (3,750) | | | | | | — | | | | | | — | | |

| Purchase of equity investments and other investing activities | | | | | | (2,054) | | | | | | (3,787) | | | | | | (51,009) | | |

| Cash and Cash Equivalents at Beginning of Period | | | | | | 204,872 | | | | | | 247,038 | | | | | | 271,888 | | |

| Cash paid for interest | | | | | | $ | 62,190 | | | | | $ | 8,680 | | | | | $ | 6,555 | |

| Purchases of business - earnout consideration recorded in accrued liabilities | | | | | | $ | 900 | | | | | $ | 4,397 | | | | | $ | — | |

throughout the United States and world.

business including the impact to our suppliers and customers as well as the impact to the countries and markets in which we

operate.

on our foreign and domestic operations starting by protecting our employees, suppliers and customers.

Business Segments. Effective July 1, 2019, the Company realigned its organizational structure into two reporting segments for the purpose of making operational decisions and assessing financial performance: (i) Compound Semiconductors and (ii) Photonic Solutions.

Refer to Note 14 for further information on reporting segments.

On September 24, 2019, the Company completed the acquisition of Finisar Corporation (“Finisar”).

The Company’s Consolidated Financial Statements include the operating results of Finisar from the date of acquisition.

Research and Development. Internal research and development costs are expensed as incurred.

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842).

This ASU modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements.

Derivatives and Hedging

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which more closely aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results.

The Company adopted this standard on July 1, 2019.

In July 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which among other things, requires the measurement of all expected credit losses of financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Financial institutions and other organizations will now use forward looking information to better inform their credit loss estimates.

In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

The Company has completed the evaluation of the impact of ASU 2016-13.

This pronouncement is not expected to have a material impact to the Consolidated Financial Statements.

In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes (“ASU 2018-16”), which permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate eligible for hedge accounting purposes.

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, [removed: 2020,] [added: 2021,] the Company’s disclosure controls and procedures are effective.

The other information required by this [removed: item] [added: item, to the extent applicable,] is incorporated herein by reference to the information set forth under the captions “Election of Directors and Delinquent Section 16(a) Reports" in the Company’s definitive proxy statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders to be filed pursuant to Regulation 14A of the Exchange Act (the “Proxy Statement”).

The [removed: web site] [added: website] and information contained on it or incorporated in it are not intended to be incorporated in this Annual Report on Form 10-K or other filings with the SEC.

The information required by this item is incorporated herein by reference to the information set forth under the caption “Director Compensation in Fiscal Year [removed: 2020,”] [added: 2021,”] “Executive Compensation,” “Compensation Committee Report” and “Compensation and Risk” in the Company’s Proxy Statement.

Schedule II – Valuation and Qualifying Accounts for each of the three fiscal years in the period ended June 30, [removed: 2020] [added: 2021] is set forth under Item 8 of this Annual Report on Form 10-K.

| 2.01 | | | | | | [Agreement and Plan of Merger, [removed: dated November] [added: dated](https://www.sec.gov/Archives/edgar/data/1094739/000110465918067123/a18-39922_1ex2d1.htm) [as of](https://www.sec.gov/Archives/edgar/data/1094739/000110465918067123/a18-39922_1ex2d1.htm) [November] 8, 2018, by and among II-VI Incorporated, Mutation Merger Sub Inc. and Finisar Corporation.](https://www.sec.gov/Archives/edgar/data/1094739/000110465918067123/a18-39922_1ex2d1.htm) | | | | | | Incorporated herein by reference to Exhibit 2.1 to II-VI’s Current Report on Form 8-K (File No. 000-16195) filed on November 9, 2018. | | |

| 3.01 | | | | | | [Amended and Restated Articles of Incorporation of II-VI [removed: Incorporated](https://www.sec.gov/Archives/edgar/data/820318/000119312511302244/d253525dex31.htm)] [added: Incorporated](https://www.sec.gov/Archives/edgar/data/820318/000119312511302244/d253525dex31.htm).] | | | | | | Incorporated herein by reference to Exhibit 3.1 to II-VI’s Current Report on Form 8-K (File No. 000-16195) filed on November 8, 2011. | | |

| 3.02 | | | | | | [Amended and Restated By-Laws of II-VI [removed: Incorporated](https://www.sec.gov/Archives/edgar/data/820318/000119312514314716/d778760dex31.htm)] [added: Incorporated](https://www.sec.gov/Archives/edgar/data/820318/000119312521062382/d22272dex31.htm), as amended and restated effective February 26, 2021.] | | | | | | Incorporated herein by reference to Exhibit 3.1 to II-VI’s Current Report on Form 8-K (File No. [removed: 000-16195)] [added: 001-39375)] filed on [removed: August 19, 2014.] [added: March 1, 2021.] | | |

| 3.03 | | | | | | [Statement with Respect to Shares, filed with the Pennsylvania Department of State Corporations Bureau and effective July 6, 2020.](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-303063020statementw.htm) | | | | | | [removed: Filed herewith.] [added: Incorporated herein by reference to Exhibit 3.03 to II-VI's Annual Report on Form 10-K (File No. 001-39375) for the fiscal year ended June 30, 2020.] | | |

| 4.03 | | | | | | [Description of II-VI's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-40306302020.htm) | | | | | | [removed: Filed herewith] [added: Incorporated herein by reference to Exhibit 4.03 of II-VI's Annual Report on Form 10-K (File No, 001-39375) for the fiscal year ended June 30, 2020.] | | |

| 4.05 | | | | | | [removed: [F](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex42.htm)[i](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex42.htm)[rst] [added: [First] Supplemental Indenture, dated as of September 24, 2019, by and among [removed: II](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex42.htm)[\-VI] [added: II-VI] Incorporated, [removed: Fin](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex42.htm)[isar] [added: Finisar] Corporation and Wells [removed: Far](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex42.htm)[go] [added: Fargo] Bank, National Association, as trustee](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex42.htm) | | | | | | Incorporated herein by reference to Exhibit 4.2 to II-VI’s Current Report on Form 8-K (File No. 000-16195) filed on September 24, 2019. | | |

| 4.06 | | | | | | Form of 0.50% Convertible Senior Notes due 2036 | | | | | | Included in Exhibit [removed: 4.04] [added: 4.04.] | | |

| 4.07 | | | | | | Form of 6.00% Series A Mandatory Convertible Preferred Stock Certificate. | | | | | | Included in Exhibit [removed: 3.04.] [added: 3.03.] | | |

| 10.01 | | | | | | [removed: [A](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm)[mended] [added: [Amended] and Restated Credit Agreement, dated as of September 24, 2019, by and among II-VI [removed: In](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm)[corporated,] [added: Incorporated,] Bank of America, N.A., as [removed: Admi](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm)[nist](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm)[rative Age](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm)[nt, S](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm)[wing] [added: Administrative Agent, Swing] Line Lender [removed: a](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm)[nd an](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm) [L/C] [added: and an L/C] Issuer, [removed: a](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm)[nd] [added: and] the other lenders party thereto](https://www.sec.gov/Archives/edgar/data/820318/000119312519253627/d806984dex101.htm) | | | | | | Incorporated herein by reference to Exhibit 10.1 to Amendment No. 1 to II-VI’s Current Report on Form 8-K (File No. 000-16195) filed on September 24, 2019. | | |

| 10.02 | | | | | | [removed: [A](https://www.sec.gov/Archives/edgar/data/820318/000119312520019766/d878420dex101.htm)[mended] [added: [Amended] and Restated [removed: Empl](https://www.sec.gov/Archives/edgar/data/820318/000119312520019766/d878420dex101.htm)[oyment] [added: Employment] Agreement, effective January 26, 2020, by and between II-VI Incorporated and Vincent D. Mattera, Jr. *](https://www.sec.gov/Archives/edgar/data/820318/000119312520019766/d878420dex101.htm) | | | | | | Incorporated herein by reference to Exhibit 10.1 to II-VI’s Current Report on Form 8-K (File No. 000-16195) filed on January 30, 2020. | | |

| 10.03 | | | | | | [removed: [](https://www.sec.gov/Archives/edgar/data/820318/000156459018022409/iivi-ex1015_8.htm)[Form] [added: [Form] of Indemnification [removed: Agreement](https://www.sec.gov/Archives/edgar/data/820318/000156459018022409/iivi-ex1015_8.htm) [between] [added: Agreement between] II-VI Incorporated [removed: a](https://www.sec.gov/Archives/edgar/data/820318/000156459018022409/iivi-ex1015_8.htm)[nd] [added: and] its directors and officers](https://www.sec.gov/Archives/edgar/data/820318/000156459018022409/iivi-ex1015_8.htm) | | | | | | Incorporated herein by reference to Exhibit 10.15 to II-VI’s Annual Report on Form 10-K (File No. 000-16195) [removed: filed on August 28,] [added: for the fiscal year ended June 30,] 2018. | | |

| 10.16 | | | | | | [II-VI Incorporated Second Amended and [removed: Restated](https://www.sec.gov/Archives/edgar/data/820318/000156459016012460/iivi-ex1001_121.htm) [2012](https://www.sec.gov/Archives/edgar/data/820318/000156459016012460/iivi-ex1001_121.htm) [Omnibus] [added: Restated 2012 Omnibus] Incentive Plan*](https://www.sec.gov/Archives/edgar/data/820318/000156459016012460/iivi-ex1001_121.htm) | | | | | | Incorporated herein by reference to Exhibit 10.01 to II-VI’s Current Report on Form 10-Q (File No. 000-16195) for the quarter ended December 31, 2015. | | |

| 10.18 | | | | | | [Form of Restricted Share Award Agreement (3 year) under [removed: the](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1005_352.htm) [](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1005_352.htm)[II-VI] [added: the II-VI] Incorporated Second Amended and [removed: Restated](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1005_352.htm) [2012](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1005_352.htm) [Omnibus] [added: Restated 2012 Omnibus] Incentive Plan*](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1005_352.htm) | | | | | | Incorporated herein by reference to Exhibit 10.05 to II-VI’s Quarterly Report on Form 10-Q (File No. 000-16195) for the quarter ended September 30, 2016. | | |

| 10.19 | | | | | | [Form of Restricted Share Unit Award Agreement under [removed: the](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1007_354.htm) [](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1007_354.htm)[II-VI] [added: the II-VI] Incorporated Second Amended and [removed: Restated](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1007_354.htm) [2012](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1007_354.htm) [Omnibus] [added: Restated 2012 Omnibus] Incentive Plan*](https://www.sec.gov/Archives/edgar/data/820318/000156459016028337/iivi-ex1007_354.htm) | | | | | | Incorporated herein by reference to Exhibit 10.07 to II-VI’s Quarterly Report on Form 10-Q (File No. 000-16195) for the quarter ended September 30, 2016. | | |

| 10.20 | | | | | | [Form of Performance Share Award Agreement under the II-VI Incorporated Second Amended and Restated 2012 Omnibus Incentive [removed: Plan*](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-102006302020.htm)] [added: Plan*](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-102006302021.htm)] | | | | | | [removed: Filed herewith.] [added: Incorporated herein by reference to Exhibit 10.20 to II-VI's Annual Report on Form 10-K (File No. 001-39375) for the fiscal year ended June 30, 2020.] | | |

| [removed: 10.22] [added: 10.29] | | | | | | [II-VI Incorporated [removed: 2018 Omnibus Incentive Plan*](https://www.sec.gov/Archives/edgar/data/820318/000119312518324694/d505039dex102.htm)] [added: Executive Severance Plan](https://www.sec.gov/Archives/edgar/data/820318/000119312519226885/d786195dex101.htm)[*](https://www.sec.gov/Archives/edgar/data/820318/000119312519226885/d786195dex101.htm)] | | | | | | Incorporated herein by reference to Exhibit [removed: 10.2] [added: 10.1] to [removed: II-VI’s] [added: II-VI's] Current Report on Form 8-K (File No. 000-16195) filed on [removed: November 13, 2018.] [added: August 22, 2019.] | | |

| 10.27 | | | | | | [Form of Stock Appreciation Rights Agreement under the II-VI Incorporated 2018 Omnibus Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/820318/000156459019002429/iivi-ex1005_15.htm)[*](https://www.sec.gov/Archives/edgar/data/820318/000156459019002429/iivi-ex1005_15.htm)] [added: Plan*](https://www.sec.gov/Archives/edgar/data/820318/000156459019002429/iivi-ex1005_15.htm)] | | | | | | Incorporated herein by reference to Exhibit 10.05 to II-VI’s Quarterly Report on Form 10-Q (File No. 000-16195) for the quarter ended December 31, 2018. | | |

| 10.28 | | | | | | [Form of Performance Share Award Agreement under the II-VI Incorporated 2018 Omnibus Incentive [removed: Plan*](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-102806302020.htm)] [added: Plan*](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-102806302021.htm)] | | | | | | [removed: Filed herewith.] [added: Incorporated herein by reference to Exhibit 10.28 to II-VI's Annual Report on Form 10-K (File No. 001-39375) for the fiscal year ended June 30, 2020.] | | |

| [removed: 10.29] [added: 10.30] | | | | | | [removed: [II-VI] [added: [Form of Participation Agreement for the II-VI] Incorporated Executive Severance [removed: Plan *](https://www.sec.gov/Archives/edgar/data/820318/000119312519226885/d786195dex101.htm)] [added: Plan*](https://www.sec.gov/Archives/edgar/data/820318/000119312519226885/d786195dex102.htm)] | | | | | | Incorporated herein by reference to Exhibit [removed: 10.1] [added: 10.2] to II-VI's Current Report on Form 8-K (File No. [removed: 000-16195)] [added: 000-016195)] filed on August 22, 2019. | | |

| 21.01 | | | | | | [List of Subsidiaries of II-VI [removed: Incorporated](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-210106302020.htm)] [added: Incorporated](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-210106302021.htm)] | | | | | | Filed herewith. | | |

| 23.01 | | | | | | [Consent of Ernst & Young [removed: LLP](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-230106302020.htm)] [added: LLP](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-230106302021.htm)] | | | | | | Filed herewith. | | |

| 31.01 | | | | | | [Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-310106302020.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-310106302021.htm)] | | | | | | Filed herewith. | | |

| 31.02 | | | | | | [Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-310206302020.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-310206302021.htm)] | | | | | | Filed herewith. | | |

| 32.01 | | | | | | [Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-320106302020.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-320106302021.htm)] | | | | | | Furnished herewith. | | |

| 32.02 | | | | | | [Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/820318/000082031820000023/ex-320206302020.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-320206302021.htm)] | | | | | | Furnished herewith. | | |

| 2.02 | | | | | | [Agreement and Plan of Merger, dated as of March 25, 2021, by and among II-VI Incorporated, Watson Merger Sub Inc. and Coherent, Inc.](https://www.sec.gov/Archives/edgar/data/820318/000119312521095186/d130942dex21.htm) | | | | | | Incorporated herein by reference to Exhibit 2.1 to II-VI's Current Report on Form 8-K (File No. 001-39375) filed on March 25, 2021. | | |

| 3.04 | | | | | | [Statement with Respect to Shares, filed with the Pennsylvania Department of State Corporations Bureau and effective March 30, 2021.](https://www.sec.gov/Archives/edgar/data/820318/000119312521102324/d135490dex31.htm) | | | | | | Incorporated herein by reference to Exhibit 3.1 to II-VI's Current Report on Form 8-K (File No. 001-39375) filed on March 31, 2021. | | |

| 10.22 | | | | | | [II-VI Incorporated](https://www.sec.gov/Archives/edgar/data/0000820318/000119312520289839/d89872dex991.htm) Amended and Restated 2018 Omnibus Incentive Plan* | | | | | | Incorporated herein by reference to Exhibit 99.1 to II-VI’s Registration Statement on Form S-8 (File No. 333-249995) filed on November 10, 2020. | | |

| 10.31 | | | | | | A[mended and Restated Investment Agreement, dated as of March 30, 2021 by and between II-VI Incorporated and BCPE Watson (DE) SPV, LP](https://www.sec.gov/Archives/edgar/data/0000820318/000119312521102324/d135490dex101.htm) | | | | | | Incorporated herein by reference to Exhibit 10.1 to II-VI's Current Report on Form 8-K (File No. 001-39375) filed on March 31, 2021. | | |

| 10.31 | | | | | | [Form of Performance Share Unit Award Agreement (Cash Flow; Share-Settled)](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-103106302021.htm) | | | | | | Filed herewith. | | |

| 10.32 | | | | | | [Form of Performance Share Unit Award Agreement (Relative TSR; Share-Settled](https://www.sec.gov/Archives/edgar/data/820318/000082031821000017/ex-103206302021.htm) | | | | | | Filed herewith. | | |

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| | | | | | | | | | | | | | | |

| 104 | | | | | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | | | | | | Filed herewith. | | |

| 10.30 | | | | | | [Form of Participation Agreement for the II-VI Incorporated Executive Severance Plan*](https://www.sec.gov/Archives/edgar/data/820318/000119312519226885/d786195dex102.htm) | | | | | | Incorporated herein by reference to Exhibit 10.2 to II-VI''s Current Report on Form 8-K (File No. 000-016195) filed on August 22, 2019. | | |

| | | | | | | II-VI INCORPORATED | | | | | | | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ Vincent D. Mattera Jr. | | | [removed: | | | | | |]

| | | | | | | | | | | | | Vincent D. Mattera Jr. | | | [removed: | | | | | |]

| | | | | | | | | | | | | Chief Executive Officer | | | [removed: | | | | | |]

| | | | | | | Principal Executive Officer: | | | | | | | | | [removed: | | | | | |]

| | | | | | | | | | | | | Chief Executive Officer and Director | | | [removed: | | | | | |]

| | | | | | | Principal Financial and Accounting Officer: | | | | | | | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ Mary Jane Raymond | | | [removed: | | | | | |]

| | | | | | | | | | | | | Mary Jane Raymond | | | [removed: | | | | | |]

| | | | | | | | | | | | | Chief Financial Officer and Treasurer | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ Francis J. Kramer | | | [removed: | | | | | |]

| | | | | | | | | | | | | Francis J. Kramer | | | [removed: | | | | | |]

| | | | | | | | | | | | | Chairman of the Board | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ Joseph J. Corasanti | | | [removed: | | | | | |]

| | | | | | | | | | | | | Joseph J. Corasanti | | | [removed: | | | | | |]

| | | | | | | | | | | | | Director | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ RADM Marc Y. E. Pelaez (retired) | | | [removed: | | | | | |]

| | | | | | | | | | | | | RADM Marc Y. E. Pelaez (retired) | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ Howard H. Xia | | | [removed: | | | | | |]

| | | | | | | | | | | | | Howard H. Xia | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ Shaker Sadasivam | | | [removed: | | | | | |]

| | | | | | | | | | | | | Shaker Sadasivam | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ Enrico Digirolamo | | | [removed: | | | | | |]

| | | | | | | | | | | | | Enrico Digirolamo | | | [removed: | | | | | |]

| Date: August [removed: 26, 2020] [added: 20, 2021] | | | | | | By: | | | | | | /s/ Michael L. Dreyer | | | [removed: | | | | | |]