UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                                    FORM 10-K
Mark one
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934
                                        
    For the fiscal year ended OCTOBER 31, 1996
                                        
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

  For the transition period from ___________ to ___________
                                        
                                        
                        OPTICAL COATING LABORATORY, INC.
              (Exact name of registrant as specified in its charter)
                                        
                          COMMISSION FILE NUMBER 0-2537
                                        
         DELAWARE                              68-0164244
(State or other jurisdiction of           (IRS Identification No.)
incorporation or organization)

                                        
            2789 NORTHPOINT PARKWAY, SANTA ROSA CALIFORNIA  95407-7397
              (Address of principal executive offices)      (Zip code)
                                        
Registrant's telephone number, including area code: (707) 545-6440
   
        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:  NONE
                                        
           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                          COMMON STOCK, $.01 PAR VALUE
                              (Title of each class)
                                        
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [X]  Yes  [ ] No

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

At December 31, 1996, the aggregate market value of the registrant's common
stock (based upon the closing price of these shares on the NASDAQ National
Market System) held by non-affiliates, which excludes shares held by
officers and directors and the Employee Stock Ownership Plan of the
registrant (not all of whom claim to be affiliates), was approximately
$86.7 million.

At December 31, 1996, there were 9,787,330 shares of the registrant's
common stock, $.01 par value, issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                        
Portions of the definitive Proxy Statement for the Company's Annual Meeting
of Stockholders to be held March 18, 1997 are incorporated by reference
into Part III of this Form 10-K.

The Exhibit index appears on Pages 42-45.
                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                                        
                       INDEX TO ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
                                        
PART I

Item 1.     Business                                              3
Item 2.     Properties                                           10
Item 3.     Legal Proceedings                                    11
Item 4.     Submission of Matters to a Vote of Security Holders  11

PART II

Item 5.     Market for Registrant's Common Equity and 
            Related Stockholder Matters                          14
Item 6.     Selected Financial Data                              14
Item 7.     Management's Discussion and Analysis of 
            Financial Condition and Results of Operations        15
Item 8.     Consolidated Financial Statements and 
            Supplemental Financial Information                   21
Item 9.     Changes in and Disagreements with Accountants 
            on Accounting and Financial Disclosure               42

PART III

Item 10.    Directors and Executive Officers of the Registrant   42
Item 11.    Executive Compensation                               42
Item 12.    Security Ownership of Certain Beneficial 
            Owners and Management                                42
Item 13.    Certain Relationships and Related Transactions       42

PART IV

Item 14.    Exhibits, Financial Statement Schedules and 
            Reports on Form 8-K                                  42

THE INFORMATION CONTAINED IN THIS REPORT INCLUDES FORWARD LOOKING
STATEMENTS WHICH ARE TYPICALLY IDENTIFIED BY THE WORDS "ANTICIPATES,"
"BELIEVES," "EXPECTS," "INTENDS," "FORECASTS," "PLANS," "FUTURE,"
"STRATEGY," OR WORDS OF SIMILAR IMPORT.  VARIOUS IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE
FORWARD LOOKING STATEMENTS ARE IDENTIFIED BELOW AND IN PART II, ITEM 7 OF
THIS REPORT. ACTUAL RESULTS MAY VARY SIGNIFICANTLY BASED ON A NUMBER OF
FACTORS INCLUDING, BUT NOT LIMITED TO, PRODUCT DEVELOPMENT,
COMMERCIALIZATION AND TECHNOLOGICAL DIFFICULTIES; MANUFACTURING COSTS AND
YIELD ISSUES ASSOCIATED WITH INITIATING PRODUCTION AT NEW FACILITIES; THE
IMPACT OF COMPETITIVE PRODUCTS AND PRICING; CHANGING CUSTOMER REQUIREMENTS;
AND THE CHANGE IN ECONOMIC CONDITIONS OF THE VARIOUS MARKETS THE COMPANY
SERVES.
                                     
                                     PART I
ITEM 1.   BUSINESS

GENERAL

Optical Coating Laboratory, Inc. and its consolidated subsidiaries (the
"Company" or "OCLI") is the world's largest independent manufacturer of
optical thin film coated components.  OCLI designs, develops and
manufactures multi-layer thin film coatings which control and enhance light
by altering the transmission, reflection and absorption of its various
wavelengths to achieve a desired effect such as anti-reflection, anti-
glare, electromagnetic shielding, electrical conductivity and abrasion
resistance.  OCLI markets and distributes components to original equipment
manufacturers (OEMs) of optical and electro-optical systems, such as
personal computers, photocopiers, LCD desktop projectors, point-of-sale
scanners, medical instruments and satellites.  OCLI sells its Glare/Guard
brand ergonomic computer display products through resellers and office
retailers.

OCLI manufactures its products at Company-owned facilities in Santa Rosa,
California, Goslar, Germany and Hillend, Scotland. The Company has
developed many of its thin film coating processes and has designed and
fabricated most of the coating equipment used to manufacture its products.
The Company believes its ability to design and build this specialized
equipment has been an important factor in its ability to compete
successfully.

The Company maintains an extensive array of thin film coating equipment,
glass fabrication equipment, precision injection molding equipment and
support facilities to satisfy its customers' requirements for thin film
coated products, fabricated glass components and precision injection molded
plastic optics components.

Through its wholly-owned subsidiary in Goslar, Germany and its principal
manufacturing facility in Santa Rosa, California, the Company operates
fully integrated precision glass fabrication operations with capability for
sawing, machining, heat-treating, chemical-treating, silk screening and
etching glass products to customer specifications.  Fabricated glass
product lines include mirrors, platens, filters, panels and an array of
optics and components made of glass.  OCLI supplies fabricated glass
elements for use as components in copiers, cameras and other electro-
optical devices and instruments.

The Company also operates a fully integrated coating facility with
additional optical fabrication capability at its wholly-owned subsidiary in
Hillend, Scotland.  From this platform, OCLI markets a broad array of
coated products with applications in commercial, scientific and military
markets.  OCLI's Hillend facility also performs research and development
under scientific and U.K. Ministry of Defense sponsorships.

Through its Netra operation, the Company manufactures precision injection
molded plastic optical components that are used in a variety of
applications such as inkjet printers, point-of-sale scanners and
sunglasses. Precision molded plastic optics allow for the production of
aspheric surfaces and have significant cost advantages over similar
products made with glass.  Plastic optics also improve impact resistance
and offer a substantial weight advantage over glass components.

Flex Products, Inc. ("Flex Products" or "Flex"), of which the Company holds
a controlling 60% interest, is a manufacturer of thin film coatings on
plastic film produced by a proprietary vacuum deposition technology on
large-scale, high-speed roll coating equipment, which was developed by OCLI
in the 1980's.  Flex's principal product, optically variable pigment (OVP),
was also invented by the Company and is used primarily in currency printing
as a security and anti-counterfeiting measure.  SICPA Holding S.A., a Swiss
company that is OCLI's 40% partner in Flex Products, is the largest
manufacturer of printing inks in the world and is currently Flex Products'
largest customer. Flex Products also manufactures and sells energy
efficient window film used for residential, commercial and automotive
energy conservation; printing plates used in offset color printing;
photoreceptor ground planes used in copiers; and pigment used in automotive
paint.

MARKETS AND PRODUCTS

DISPLAY-OEM AND AFTERMARKET.  The Company is a leading supplier of anti-
reflection coatings to original equipment manufacturers (OEMs) for use on
computer terminals and other cathode ray tube (CRT) displays, flat panel
displays, liquid crystal displays (LCDs) and touch panel displays (among
other applications) to improve the readability of the information displayed
by reducing glare from reflected light while optimizing the transmission of
light from the display.  The coatings are produced in several
configurations to meet varied customer requirements, including as laminates
with conductive qualities to reduce electromagnetic and electrostatic
discharge. The Company also produces ergonomic enhancement products which
are sold in the computer end-user market under its Glare/Guard brand and on
a private label basis. The filters provide viewing comfort and health and
safety protection for computer users by improving the visibility of the
information displayed on computer display monitors. Several models are also
capable of minimizing electrical and magnetic field radiation and static
charge buildup of display devices.

PROJECTION DISPLAY.  The Company manufactures a variety of components used
in projection display products, such as front surface mirrors used in large
screen projection televisions and dichroic color filters used in LCD and
digital light processing projector systems.

OFFICE AUTOMATION.  The Company manufactures a complete line of high
quality products for office automation OEMs, including front surface
mirrors for photocopiers, document scanners, overhead projectors, facsimile
machines and laser beam printers; platen glass and photoreceptors for
photocopiers; hot and cold mirrors used in micrographic readers and
overhead projectors; color separation filters for desktop document
scanners; and precision molded plastic components used in inkjet printers.

SECURITY PRODUCTS.  Through Flex Products, OCLI manufactures and markets
optically variable pigment used in currency printing as an anti-
counterfeiting measure. Flex Products' largest customer for OVP, and OCLI's
partner in Flex Products' ownership, is SICPA Holding S.A., one of the
leading manufacturers of printing inks in the world. Currently, over 40
countries have adopted the use of ink made with optically variable pigment
in the printing of currencies and other valued documents, including
Albania, Argentina, Belgium, Bermuda, Czech Republic, France, Germany,
Italy, Kazakhstan, Kenya, Lebanon, Luxembourg, Morocco, Nigeria,
Philippines, Poland, Singapore, Slovak Republic, Slovenia, Switzerland,
Thailand, Tunisia, Turkey, United Arab Emirates, United States and Zaire.
     
INSTRUMENTATION.  The Company manufactures a wide array of filters,
reflectors and optical components for use in medical, biochemical,
scientific and analytical instruments, manufacturing process control
instruments, barcode scanners, point-of-sale scanners, focus devices in
cameras and slide projectors, instruments used to monitor blood glucose
levels and instruments used to measure color in paint pigment.

SPECIALTY MARKETS.  The Company manufactures products for a variety of
specialty applications including dichroic filters for specialty stage
lighting; energy control window film for architectural applications;
optically variable pigment used in automotive paint; precision molded
plastic optics for sunglasses and anti-reflection linear polarizers for
viewcams.

DEFENSE AND AEROSPACE.  The Company designs and manufactures many
sophisticated, high precision coated products and optical components to
meet the specific performance requirements of advanced scientific, space
and defense systems.  Examples include coated infrared optics for use in
all-weather missile guidance systems, reconnaissance systems and
satellites; coatings to protect photovoltaic solar cells on satellites from
overheating and from harmful ultraviolet energy and micro meteorite damage;
coated thermal control mirrors to regulate spacecraft temperature in areas
of sensitive instrumentation; and coated laser optics for use in defense
applications, the development of alternative energy sources and commercial
high energy laser instrumentation.

MANUFACTURING

The Company's initial growth came from the development of high precision
coated products for use primarily in defense and aerospace applications and
in sophisticated analytical equipment.  These types of coated products are
produced by relatively costly batch processes and continue to represent a
portion of the Company's revenues.  From this base, the Company has
expanded into commercial markets by designing and fabricating continuous
coating equipment capable of producing a high volume of relatively less
complex products at lower unit costs.  This large-scale equipment has
enabled the Company to serve broad commercial markets with many of its
products.

The Company has developed many of its thin film coating processes and has
designed, fabricated or significantly customized most of the coating
equipment used in production, including its continuous coaters, batch
coaters and high speed roll-to-roll coaters.  The Company believes its
ability to design and build this specialized equipment, and its ability to
develop proprietary process technologies, has been an important factor in
enabling it to compete successfully. Consequently, the Company maintains an
extensive array of thin film coating equipment, glass fabrication equipment
and metrology equipment to meet customer requirements for coated products
and fabricated glass components.

The Company employs various coating processes which it has developed and
established over many years.  It employs batch coating by evaporation as
its historic coating process and batch coating by reactive metal mode
sputtering as a proprietary, patented process.  In its continuous in-line
coating systems, the Company similarly employs evaporation and sputtering
processes.  The Company's Flex Products subsidiary also employs proprietary
evaporation processes and sputtering in its high speed roll-to-roll coating
systems.  The Company and its subsidiary operations have extensive
auxiliary material preparation and glass fabrication equipment in place
which allow the Company to produce a broad array of coated glass and
plastic components and coated products for a wide variety of applications.

The Company has developed and procured extensive state-of-the-art metrology
and test equipment to allow testing and verification of technological and
performance characteristics of its products.  This capability, including
the expertise of the Company's scientific and technical staff to develop
and design specific thin film coatings to meet a customer's application
requirements, is frequently an integral aspect sought by customers in
selecting the Company as a supplier.

The Company has established strong, long-term customer relationships and
serves a wide range of markets, including leading manufacturers of
computers, photographic equipment, copier products, medical
instrumentation, home entertainment products, and space and defense
systems.  The Company's Flex Products subsidiary also has long-term
relationships with customers in its markets.

RESEARCH AND DEVELOPMENT

The Company devotes substantial resources to research and development in
order to develop new and improve existing thin film products, processes and
manufacturing equipment.  As a result, the Company has developed a
technological leadership position in the thin film coatings industry, and
customers rely on the Company's thin film consulting expertise as well as
its products.

The Company has focused considerable effort over the past several years to
the development of solid-state electrochromic devices using thin film
coating technologies.  Electrochromic devices dim or brighten in response
to low level variations in electrical current over their surface, allowing
for regulated changes in reflection or transmission of light. The Company's
research and development efforts in electrochromic coatings envision a
number of product applications, including plano and prescription
electrochromic sunglasses, photographic applications, privacy screens,
energy conserving architectural glass forms and brightness or reflection
controls for display devices.

The Company's ongoing research and development commitments include
techniques to improve coating uniformity on plastic substrates for flat
panel display applications; automation of the Company's coating equipment
to improve product and increase equipment productivity; development of new
and improved product configurations for the Glare/Guard market; and
reduction and eventual elimination of coating and cleaning materials that
may be hazardous to the environment.

Flex Products' major research and development effort has been toward the
development and integration of state-of-the-art coating processes for use
in new coating machines which the subsidiary installed during fiscal 1996.

Company funded research and development expenditures totaled $11.7 million,
$8.4 million and $5.2 million, or  6.2%, 5.0% and 4.0% of revenues, during
fiscal years 1996, 1995 and 1994. In addition to the research and
development funded by the Company, many of the Company's customer contracts
involve state-of-the-art coating applications requiring substantial amounts
of development in support of specific customer applications.

PATENTS AND LICENSES

The Company believes its proprietary technology, its trade secrets and its
patents to be of considerable value to its business.  The Company believes
that its patents demonstrate and support its technological leadership
position, safeguard its competitive position and support existing and
potential sales volume.

The Company has 47 patents and 51 patent applications in the United States
which cover materials, processes, products and production equipment.  The
Company also has patents and patent applications pending in various foreign
countries covering the same technology. Expiration dates for the Company's
various patents range from 1997 to 2012. Flex Products currently has 35
patents and 13 new patent applications pending that are separate from the
Company's patents. Expiration dates for Flex Products' patents range from
1997 to 2013.  Flex Products also has patents and patent applications
pending in various foreign countries covering the same technology.

In 1988, at the formation of Flex Products as a joint venture, the Company
and Flex Products entered into a License Agreement under which certain of
the Company's patents relating to roll coating technology were assigned to
Flex Products and Flex Products agreed to make royalty payments to the
Company for the use of these patents.  The License Agreement provides for
royalties of 4% of Flex Products' revenues. The royalty payments are to
continue for several years until a total of $13.7 million is paid. At
fiscal year end 1996, $6.6 million remained to be paid. Also, under the
License Agreement, the Company and Flex Products each hold royalty-free
licenses to use certain of the others' underlying technologies that are
applicable to their respective markets. In addition, the Company and Flex
Products hold royalty-free shared use licenses for technologies applicable
to both markets.

TECHNOLOGY LICENSING

The Company selectively licenses its coating technology to other companies,
primarily for integrated, mass production applications that the Company
would not otherwise be able to provide as a manufacturer in the ordinary
course of its business. During the past five years, these licenses,
together with sales of equipment built for licensees in support of the
licenses, have generated revenues to the Company totaling approximately $10
million.

MARKETING

The Company's products are sold by its sales organizations, headquartered
in Santa Rosa, California and Reinheim, Germany, who communicate directly
with customers' engineering, manufacturing and purchasing personnel in
determining the design, performance and cost specifications for customer
product requirements.  The Company has regional sales offices in several
major cities throughout the United States and in Germany, France, Italy,
Spain and the United Kingdom. In Japan and other Asian countries, the
Company uses independent distributors and sales representatives, supported
by Company sales staff members, for product marketing and sales.

With the exception of its Glare/Guard(R) product line, the Company markets
most of its standard, high volume coated products and fabricated glass
components to OEMs.  Its customized, technically sophisticated products are
also marketed to OEMs in addition to defense and aerospace contractors. The
Company exports some of its products to major distributors who perform
product conversion and other value-added process steps before resale. The
Company's Glare/Guard(R) product line is marketed through distributors and
dealers directly to end users.

Flex Products sells into several significant markets with a small,
technically oriented sales organization supported by operations and
engineering personal in a sales team approach.

The Company's ten largest customers accounted for 36% of its sales in 1996.
The Company's largest customer in 1996, who is also the Company's 40%
partner in the ownership of Flex Products, accounted for approximately 13%
of total sales for fiscal 1996 and 12% of total sales for the six months of
consolidation of Flex Products in fiscal 1995.  The Company's second
largest customer in 1996 and largest customer in 1995 accounted for 5%, 8%
and 7% of its sales in fiscal years 1996, 1995, and 1994. Because
relatively few customers account for a substantial portion of the Company's
sales, the loss of their business could have a material adverse effect on
the Company's operating results.  However, the Company believes that it has
the resources and capabilities to replace any lost business over time
through the development of new products and new applications for its
products.

Foreign sales, primarily in Europe and Asia, including foreign sales of
Flex Products for fiscal 1996 and six months of 1995, represented 48%, 47%
and 45% of revenues for fiscal years 1996, 1995 and 1994.  Sales by the
Company's wholly-owned subsidiary in Scotland represented 5%, 10% and 16%
of revenues for fiscal years 1996, 1995 and 1994.  Sales by the Company's
wholly-owned subsidiary in Germany represented 13%, 13% and 15% of revenues
for fiscal years 1996, 1995 and 1994.  Sales by these subsidiaries are
primarily to customers in European countries.

Export sales by U.S. operations to Asian countries represented 13%, 13% and
11% and to European countries 14%, 9% and 3% of revenues for fiscal years
1996, 1995 and 1994.  Export sales can be affected by adverse currency
alignments.  Since the Company also manufactures in two European countries
to serve local markets, the Company believes its exposure to fluctuations
in foreign currencies is reduced.  In addition, a major portion of export
sales are to long-standing customers of the Company who have participated
in the development of product specifications and standards for their use
and who are, therefore, not relying on competitive pricing alone in their
decision to buy from the Company.  Accordingly, the Company believes its
export sales portfolio to be well-balanced and with limited risk of
substantial overall loss.

Sales of products to the federal government, primarily under subcontracts,
accounted for 9%, 10% and 11% of revenues for the fiscal years 1996, 1995
and 1994. The Company's cost-plus-fixed fee (CPFF) government contracts for
fiscal years 1996 and 1995 are subject to pending governmental audit
review.  The audits entail, primarily, a review of costs and expenses
charged to government contracts with the focus on potential adjustments to
the allocation of general and administrative expenses.  General and
administrative expense allocations to CPFF contracts were $796,000 for 1996
and $1.8 million for 1995.  The Company does not expect pending
governmental audits to result in adjustments that will have a material
impact on future operating results.

RAW MATERIALS AND SUPPLIERS

The primary raw materials used by the Company in its coating operations are
various forms of glass, germanium, fused silica and several types of
plastic and inorganic coating materials, such as magnesium fluoride,
silicon dioxide, aluminum or germanium.  The Company has more than one
supplier for each of its raw materials and maintains adequate inventories
and close working relationships with its suppliers to assure a continuous
and adequate supply for production. The Company purchases special grade
flat glass under long-term allocation arrangements from one major U.S.
glass supplier and cannot routinely increase its supply of such special
grade flat glass.  The Company has not experienced any significant
interruptions in production due to a shortage of raw material. Substrate
materials are purchased by the Company or supplied by customers, while
coating materials and their composition are generally supplied by the
Company, as they are often considered a proprietary element of the
manufacturing process.

In the Company's Netra operation, the primary raw material used is high
quality granular polycarbonite plastic base stock which the Company
procures from one principal supplier.  Although the Company has experienced
price increases for this raw material, and there is currently product
supply allocation, it has been able to maintain its supply because of the
long-term customer relationship with the supplier.

Flex Products uses significant quantities of plastic film and inorganic
coating materials in the manufacture of its products.  There is more than
one supplier for both materials, and Flex Products has not experienced
production interruptions due to a shortage of raw materials.

SEASONALITY

The Company's business is not seasonal in any material sense. However, the
Company customarily shuts down a major portion of its operations between
Christmas and New Year's Day.  As a result, during the last five fiscal
years, normally scheduled work days for the first fiscal quarter have
averaged 56 compared to an average of 64 for the other three fiscal
quarters.  Nonetheless, the Company generally has sufficient manufacturing
capacity and the ability to schedule additional production shifts to meet
its customers' shipment requirements in any period of the year.  The
Company believes that its revenues and costs are consistently matched in
each fiscal quarter since labor costs during the holiday shutdown period
are generally charged to holiday and vacation labor expense categories
which are accounted for on a pro rata basis over the fiscal year.

The Company's European subsidiaries customarily shut down their operations
for a two week summer vacation.  The summer shutdown has historically
reduced the Company's fiscal fourth quarter sales in Europe as compared to
sales in the other three fiscal quarters.  In 1996 and prior years, the
decline in sales during the summer in Europe has not been significant to
the consolidated operations of the Company. However, such seasonality could
become significant in future periods depending upon the overall
significance of European sales to total Company sales.

BACKLOG

The Company's backlog of orders at the end of each of the last three fiscal
years ended October 31, 1996, 1995 and 1994 was as follows:

                    1996      1995      1994
                        (In Millions)
                    $51.6     $47.9     $35.0

At October 31, 1996, backlog includes $4.9 million from Flex Products,
which represents orders and specifically scheduled releases on long-term
contracts for delivery within 12 months.  Substantially all orders in
backlog at October 31, 1996 are scheduled for shipment during 1997.  The
amount of backlog at October 31, 1996 represents only a portion of
anticipated sales in 1997, with new orders historically comprising the
major portion of sales in a fiscal year.

Backlog consists of new orders on which shipments have not yet started or
unfilled portions of orders which are only partly completed.  Some of these
orders are completed within several days of receipt, while others are not
completed for a number of months.  Substantially all orders included in
backlog are subject to cancellation without penalty; however, the Company
generally has not experienced significant order cancellations.
Contractually specified delivery dates on orders sometimes are adjusted at
the request of either the customer or the Company.

Flex Products has multi-year supply contracts with two of its customers
which include annual buy requirements with take or pay provisions.  It is
the practice of Flex Products to only include specifically scheduled
shipment releases under these contracts in reported backlog.

COMPETITION

The Company believes its ability to compete successfully in its markets
depends on a number of factors, both within and outside of its control,
including the price, quality and performance of the Company's products, the
emergence of new optical standards, the ability to maintain adequate
coating capacity and sources of raw materials, the efficiency of its
manufacturing and production, the rate at which customers design the
Company's products into their products, the number and nature of the
Company's competitors in a given market, the assertion of intellectual
property rights and general market and economic conditions.   The Company
attempts to position itself as the exclusive or principal supplier to most
of its key customers.  To the extent competitors offer similar products to
the Company's customers, pricing pressure may result.  When the Company is
unable to differentiate its product offerings, competition and related
pressure on profit margins can be intense.

The Company's competitors include several private companies whose sales of
coated products are believed to be considerably less than the Company's, as
well as coating operations that comprise only a portion of the total
business of other companies.  The Company's glass fabrication operation in
Germany also has local and foreign competitors. The Company believes none
of these competitors has the wide array of technologies or manufacturing
capabilities available at OCLI.

The Company has a larger number of domestic and foreign competitors for its
Glare/Guard anti-glare optical filters.  Companies that purchase coated
glass and assemble and sell filters in competition with the Company include
Fellows, Polaroid, ACCO and 3M. The Company is the world's largest
manufacturer of anti-reflective optical filters, as measured by total
number of units produced, manufacturing filters for both Glare/Guard
products and private label distributors.  Glare/Guard is one of the most
recognized brand names in its market, both domestically and
internationally.

Flex Products' position in its major market is technologically proprietary
and patent protected. In this market, and in the remainder of its business,
Flex Products competes through product innovation, customer service and
willingness to invest in additional manufacturing capacity.

The Company responds to competition primarily on the basis of the advanced
technical characteristics and quality of its products; its ability to meet
and exceed individual customer design and performance specifications; its
dependability and capability as a manufacturer and supplier; the quality of
technical assistance and service furnished to its customers; and the
competitive pricing of its products.

EMPLOYEES

At October 31, 1996, the Company, including Flex Products, had 1,362
employees of whom 1,083 were employed domestically, 97 were employed by the
Company's operations in Hillend, Scotland; 156 were employed by the
Company's OCLI/MMG Division in Goslar, Germany; and 26 were employed in the
Company's sales and administrative offices in Europe. The Company has not
experienced a work stoppage due to labor difficulties.  The Company
believes its employee relations are satisfactory.

None of the Company's employees in its domestic operations, in its
operations in Scotland or in its European sales and administrative offices
are subject to collective bargaining agreements.  Approximately 70% of the
Company's employees in Goslar, Germany, are members of the national
chemical, paper and ceramic union organization in Germany.  The unionized
employees work under a collective bargaining agreement.

In 1987, the Board of Directors approved increases in severance benefits
for its domestic employees, not including Flex Products, in the event of
certain changes in control of the Company. These severance arrangements
have been extended through November 1997.

OCLI attributes much of its success to its strong relationship with its
employees.  The Company has instituted several employee oriented programs,
including Total Quality Management and high performance work system
practices, to enhance the quality and efficiency of its operations while
improving employee relations.

JOINT VENTURES, INVESTMENTS AND ACQUISITIONS

Information regarding joint ventures, investments and acquisitions is
included in Note 4 to the Consolidated Financial Statements filed as part
of this Annual Report on Form 10-K.

ITEM 2.   PROPERTIES

The Company's corporate headquarters and principal manufacturing and
research and development facilities are located on a Company-owned campus
in Santa Rosa, California. The site consists of approximately 75 acres of
land of which approximately 53 acres are occupied by existing operations,
with the remaining 22 acres currently held available for development or
sale.  The site is within an industrial park area and is served by well-
developed road access and utilities. In addition, the Company leases
offices for its sales personnel located in various cities in the U.S.,
Europe and the Far East.

The following table sets forth certain information concerning the Company's
principal facilities.

               NO. OF     LEASED/  TOTAL   SITE
LOCATION       BUILDINGS  OWNED    SQ. FT. (ACRES)  USE

Santa Rosa, CA    12     Owned(1)  426,000   75     Optical Coating 
                                                    Laboratory, Inc. and Flex 
                                                    Products, Inc. corporate
                                                    offices, manufacturing, 
                                                    engineering, research
                                                    and development

Santa Rosa, CA     1     Leased     23,000   --     Netra operations 
                                                    administrative offices
                                                    and manufacturing

Santa Rosa, CA     1     Leased     30,000   --     Glare/Guard warehousing

Hillend, Scotland  1     Owned(2)   56,000   16     OCLI Optical Coating
                                                    Laboratory, Ltd.
                                                    administrative offices,
                                                    manufacturing and
                                                    research and development

Hillend, Scotland   1    Leased      9,000  --      OCLI Optical Coating
                                                    Laboratory, Ltd.
                                                    warehousing

Goslar, Germany     2    Owned(3)   74,000  22      OCLI/MMG Division
                                                    administrative offices 
                                                    and manufacturing

Reinheim, Germany   2    Leased(4)   7,400  --      OCLI Optical Coating
                                                    Laboratory GmbH
                                                    administrative and sales 
                                                    offices; European
                                                    Glare/Guard distribution 
                                                    center

 (1) During fiscal 1996, the Company entered into two mortgage loan
agreements in the amount of $2.6 million and $3.0 million, respectively.
The loans are collateralized by the land and buildings of two newly
constructed manufacturing and office buildings located on the Company's
Santa Rosa, California campus. The term of each non-recourse loan is 15
years, with fixed interest rates of 8% and 7.5%, respectively. Payments of
principal and interest for the loans are $25,000 and $28,000 per month,
respectively. The Company leases one of the new buildings to Flex Products
for its corporate offices and additional manufacturing facilities.

(2) The facility occupied by OCLI Optical Coating Laboratory, Ltd. (OCLI
Ltd.) in Scotland was constructed for the subsidiary by the Scottish
Development Agency (SDA). The facility consists of a manufacturing and
office building on a 16 acre site in an industrial park area.  The property
is owned by the Company subject to a mortgage held by SDA that has a
remaining balance of $4.0 million as of October 31, 1996, with 10 years
left on the term of the mortgage. At the beginning of 1995, OCLI Ltd.
negotiated a three year mortgage interest moratorium, with principal
continuing to be payable to Locate in Scotland (formerly SDA), as economic
inducement to encourage business and employment growth in this region of
Scotland.

(3) The Company's OCLI/MMG Division in Goslar, Germany, occupies two
manufacturing buildings totaling approximately 68,000 square feet and an
adjacent 6,000 square foot office building located on approximately 22
acres in an industrial park area.  The land is held under a long-term
hereditary rights agreement.  The manufacturing facility is pledged as
security on loans totaling approximately $2.5 million with repayment terms
running through 2013. The office building is collateralized on an
approximately $617,000 mortgage loan with repayment over ten years by 2005.

(4) The Company leases approximately 3,100 square feet of office space for
its European headquarters and sales activities and approximately 4,300
square feet of warehousing space for its European Glare/Guard distribution
operation in Reinheim, Germany. In December 1996, subsequent to fiscal year
end, the Company began moving its European distribution center activities
to an outside warehousing company in the Netherlands.  It is expected that
the transfer will be completed by the end of the second quarter of 1997.

Management believes that the Company's facilities are adequate for its
current level of business and the near-term growth requirements of the
Company and its subsidiaries.

ENVIRONMENTAL

In 1988, the Company discovered ground water contamination at its principal
facilities in Santa Rosa. The Company conducted extensive investigations to
determine the lateral and vertical extent and the environmental impact of
the contamination. During 1990, the Company substantially completed its
investigation and study and formulated a plan of remediation.  The total
cost of the investigation was approximately $5 million which has been
charged to operations in prior periods.

Based upon extensive tests conducted to date, it has not been demonstrated
that contaminant levels pose a current public health hazard.  The Company
has established a program for reducing contaminant concentration levels to
acceptable federal and state levels with the assistance of its
environmental consultants and under the regulatory guidance of the
California Regional Water Quality Control Board.  In 1996, the California
Regional Water Quality Control Board approved the Company's final
remediation plan, thus establishing the extent of the Company's
responsibility for ground water remediation. In prior years, the Company
recorded accruals to cover the future estimated cost of drilling additional
extraction and monitoring wells and considers those accruals to be
adequate. The Company is continuing to evaluate the effectiveness of its
monitoring, extraction and remediation systems.

Based upon the extensive tests conducted and advice of environmental
consultants, the Company believes the accruals it has previously
established to complete the remediation plan are sufficient and that the
annual cost of maintaining compliance with environmental standards related
to the above matter will not have a material adverse effect on the
Company's business, financial position or prospects.

ITEM 3.   LEGAL PROCEEDINGS

During the past several years, the Company has been engaged in litigation
in the United Kingdom (U.K.) involving infringement of a Company patent by
a U.K. company.  The Company won its action at the Patents County Courts
level but lost on appeal to the U.K. House of Lords.  During the injunction
period, the U.K. company submitted a claim for damages totaling
approximately $1.6 million for lost profits.  The Company and legal counsel
are in the process of reviewing the claim.  Management believes that the
amount of the claim is substantially overstated and that the ultimate
settlement will not have a material adverse effect on the financial
statements.

During fiscal 1996, SICPA Holding S.A. (SICPA), the 40% joint owner of Flex
Products, filed suit in Delaware Chancery Court seeking injunctive and
other relief against the Registrant, Flex Products and certain of Flex
Products' directors.  In the suit, SICPA alleges that Flex Products cannot
proceed with an initial public offering of its common stock without the
consent of SICPA and that SICPA has the right to purchase the Registrant's
60% ownership of Flex Products pursuant to a call option beginning after
May 8, 1998. In January 1997, the Delaware Chancery Court rendered a
decision that upheld the position of OCLI and Flex Products that a simple
majority of the Flex Products' Board of Directors has the legal authority
to authorize a public offering of Flex Products' securities without the
approval of SICPA. The Court's decision did not address the specific
requirements of any future public offering by Flex Products which may still
need to be addressed by the Court.

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

There were no matters submitted to a vote of the Company's security holders
during the three months ended October 31, 1996.

EXECUTIVE OFFICERS OF THE COMPANY

The names, ages and positions of the executive officers of the Company as
of January 15, 1997 are listed below, followed by a brief description of
their business experience during at least the past five years.  Officers
are appointed annually by the Board of Directors at the next regularly
scheduled meeting of the Board following the Annual Meeting of
Stockholders.  There are no family relationships among these officers nor
any arrangements or understandings between any officer and any other person
pursuant to which an officer was selected.

NAME                      AGE   POSITION               BUSINESS EXPERIENCE
                              
Herbert M. Dwight , Jr.    66   Chairman of the Board, Chairman of the Board, 
                                President and Chief    President and Chief
                                Executive Officer      Executive Officer since 
                                                       August 1991; Chairman,
                                                       President and Chief 
                                                       Executive Officer,
                                                       Superconductor 
                                                       Technologies, Inc. 
                                                       from 1988 to 1991; 
                                                       Chief Executive 
                                                       Officer, Spectra Physics
                                                       from 1967 to 1988

Charles J. Abbe             55   Vice President and    Vice President and 
                                 General Manager,      General Manager, 
                                 Santa Rosa Division   Santa Rosa Division 
                                                       since April 1996; 
                                                       various senior
                                                       management positions 
                                                       with Raychem Corporation
                                                       from 1989 to 1996
William C. Burgess          50    Vice President,      Vice President, Human 
                                  Human Resources      Resources since June 
                                                       1994; Vice President, 
                                                       Human Resources and 
                                                       Administration, 
                                                       Teknekron Communica-
                                                       tion Systems, Inc.
                                                       from 1991 to 1994
  
Klaus F. Derge              59    Vice President,      Vice President, 
                                  International        International 
                                  Operations           Operations since July
                                                       1992; various senior 
                                                       management positions
                                                       with Spectra-Physics, 
                                                       Sweden from 1969 
                                                       to 1992.

John McCullough             63    Vice President       Vice President since
                                  and Director         January 1992; Director
                                                       since 1985; Executive
                                                       Vice President from
                                                       1988 to 1992; Senior 
                                                       Vice President from 
                                                       1978 to 1988; Vice 
                                                       President, Commercial 
                                                       Products and Raytek 
                                                       Divisions from 1976 
                                                       to 1977; Vice 
                                                       President, Finance 
                                                       and Administration 
                                                       from 1958 to 1967

Laurence D. Parson          48    Vice President,      Vice President, Sales 
                                  Sales                since October 1996; 
                                                       Vice President and 
                                                       General Manager, 
                                                       Glare/Guard Division 
                                                       from 1993 to 1996; 
                                                       General Manager,
                                                       Glare/Guard Division 
                                                       from 1992 to 1993; 
                                                       various manufacturing, 
                                                       marketing and sales 
                                                       positions from 1973 
                                                       to 1992


Kenneth D. Pietrelli        48    Vice President,      Vice President, 
                                  Corporate Services   Corporate Services 
                                                       since June 1993; 
                                                       Corporate Materials 
                                                       Manager from 1980 to
                                                       1993

James W. Seeser, Ph.D.      53   Vice President and   Vice President since 
                                 Chief Technical      March 1986 and Chief
                                 Officer              Technical Officer since 
                                                      November 1993; General
                                                      Manager, Advanced 
                                                      Products Division from 
                                                      1987 to 1989; various 
                                                      engineering and 
                                                      engineering management 
                                                      positions from 1983 to 
                                                      1986

Joseph C. Zils              42   Vice President,      Acting Chief Financial 
                                 General Counsel,     Officer since January
                                 Corporate Secretary  1997; Vice President 
                                 and Acting Chief     since June 1993; 
                                 Financial Officer    Corporate Secretary 
                                                      since December 1993; 
                                                      General Counsel
                                                      since February 1989

Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 is set forth in the definitive Proxy Statement
relating to the Company's 1996 Annual Meeting of Stockholders, which
information is incorporated herein by reference.

                                     PART II

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

The Company's common stock is traded on the NASDAQ National Market System
under the symbol OCLI.  The table below sets forth the high and low prices
of the Company's common stock during the two most recent fiscal years ended
October 31, 1996 and 1995.
                                 
                                 1Q     2Q      3Q     4Q        FY 
1996
 High                         15-3/8  14-3/8   19-1/4  15      19-1/4
 Low                           9-1/4  10-1/8   12-1/2  10-1/4   9-1/4

1995
 High                          7-7/8  10-1/8   11-3/8  13-7/8  13-7/8
 Low                           5-3/4   7-1/2    8-3/8  10-1/4   5-3/4

DIVIDEND INFORMATION

Since June 1991, the Company has paid a semiannual cash dividend of $.06
per share on its common stock.

APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK

There were 806 holders of record of the Company's common stock as of
December 31, 1996.

ITEM 6.   SELECTED FINANCIAL DATA

Years ended October 31, 1996, 1995, 1994, 1993 and 1992

(Amounts in thousands, 
except per share amounts)   
                            1996      1995      1994       1993      1992

Revenues                  $189,195  $169,417  $131,780   $123,013  $115,016

Net income (loss) before 
 cumulative effect of 
 changes in accounting
 principles and dividend 
 on preferred stock         $5,196    $7,391    $4,604    $(5,737)   $6,027

Net income (loss) 
 applicable to
 common stock               $4,236    $6,929    $4,604    $(5,737)   $6,537

Net income (loss) 
 per common and
 common equivalent 
 share                        $.41      $.73      $.51      $(.65)     $.69

Average common and 
 common equivalent
 shares outstanding         10,301     9,510     9,023      8,795     8,636

Cash dividend paid on 
 common stock                $1,153   $1,083    $1,075     $1,043      $967

Working capital             $38,087  $28,015   $28,692    $16,251   $27,399

Total assets               $172,771 $169,834  $118,879    $99,226   $91,313

Long-term debt              $45,788  $47,267   $35,441    $23,110   $14,900

Convertible redeemable 
 preferred stock            $11,309  $11,357

Stockholders' equity        $68,250  $62,537   $52,037    $47,135   $52,254

Stockholders' equity 
 per share                    $6.99    $6.59     $5.79      $5.25     $6.16

Number of employees           1,362    1,407     1,162      1,107     1,000     


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

THE INFORMATION CONTAINED IN MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION INCLUDES FORWARD LOOKING
STATEMENTS WHICH ARE TYPICALLY IDENTIFIED BY THE WORDS "ANTICIPATES,"
"BELIEVES," "EXPECTS," "INTENDS," "FORECASTS," "PLANS," "FUTURE,"
"STRATEGY," OR WORDS OF SIMILAR IMPORT.  VARIOUS IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE
FORWARD LOOKING STATEMENTS ARE IDENTIFIED BELOW. ACTUAL RESULTS MAY VARY
SIGNIFICANTLY BASED ON A NUMBER OF FACTORS INCLUDING, BUT NOT LIMITED TO,
PRODUCT DEVELOPMENT, COMMERCIALIZATION AND TECHNOLOGICAL DIFFICULTIES;
MANUFACTURING COSTS AND YIELD ISSUES ASSOCIATED WITH INITIATING PRODUCTION
AT NEW FACILITIES; THE IMPACT OF COMPETITIVE PRODUCTS AND PRICING; CHANGING
CUSTOMER REQUIREMENTS; AND THE CHANGE IN ECONOMIC CONDITIONS OF THE VARIOUS
MARKETS THE COMPANY SERVES.

RESULTS OF OPERATIONS

FISCAL 1996 COMPARED TO FISCAL 1995

REVENUES.  Revenues for the Company were $189.2 million for its fiscal year
ended October 31, 1996 compared to revenues of $169.4 million for fiscal
year 1995.  Excluding the revenues of Flex Products, Inc. (Flex Products),
fiscal 1996 revenues would have been $158.6 million an increase of $4.8
million, or 3%, over 1995 adjusted revenues of $153.8 million.  The 1996
revenue increase was due to higher sales in the Company's display products
business for products used in projection display applications, higher sales
in the Company's defense and aerospace business for products used in
telecommunications applications and licensing revenue from the sale of a
coating machine. These increases were partially offset by decreased sales
in the Company's office automation and OEM display and computer aftermarket
display businesses.  Flex Products reported 1996 revenues of $30.6 million
compared to six month revenues of $15.6 million in 1995.  The Company
increased its ownership in Flex Products from 40% to a controlling 60% in
May of 1995, resulting in the consolidation of Flex Products' financial
results into the Company's financial statements for the last six months of
fiscal 1995.

GROSS PROFIT.  Gross profit as a percent of revenue was 33.0% in 1996
compared to 37.4% in 1995. Excluding the effect of Flex Products, the 1996
gross profit percentage would have been 31.4% compared to a gross profit
percentage of 36.6% in 1995.  The gross profit percentage decrease in 1996
was primarily due to lower shipments of higher margin products used in
computer display applications and start-up costs and additional fixed costs
associated with adding new manufacturing facilities and coating capacity.
These expenses were partially offset by the gross profit associated with
the sale of a coating machine. In addition, the Company experienced price
decreases and lower unit volumes both domestically and in Europe in its
office automation and computer aftermarket display businesses.  These
decreases were partially offset by initiatives to shift resources to other
markets and initiatives to increase manufacturing efficiencies in order to
decrease unit cost. Flex Products' gross profit percentage for 1996 was
41.1% compared to a gross profit percentage of 45.8% for its six months of
consolidation in 1995. Flex Products' gross profit percentage decrease was
due to start-up costs of bringing a new coating machine and manufacturing
process on line. Flex Products' gross profit margins are higher than the
rest of the Company due to the high proprietary content of its products.

RESEARCH AND DEVELOPMENT.  Research and development expenditures for 1996
increased $3.3 million over research and development expenditures for 1995.
Excluding the results of Flex Products, 1996 research and development
expenditures would have increased 3% over expenditures for 1995 and would
have been consistent with the research and development expenditures for
1995 of 4.8% of revenues.  Flex Products incurred research and development
expenses of $4.2 million compared to research and development expenses of
$1.1 million for its six months of consolidation in 1995.  The 1996
increase is attributable to the development and integration of state-of-the-
art coating processes for use in two new coating machines installed during
fiscal 1996.

SELLING AND ADMINISTRATIVE.  Selling and administrative expenses decreased
$317,000 in 1996 over 1995.  Excluding the results of Flex Products, 1996
selling and administrative expenses would have decreased $2.9 million, or
8%, compared to 1995.  The 1996 decrease is primarily due to higher
expenses recorded in 1995 associated with the Company's European sales
operations that were not incurred in 1996.  Flex Products' selling and
administrative expenses for 1996 were $4.8 million, which was consistent
with its run rate for 1995.

The Company recorded amortization of intangibles of $1.1 million in 1996
and $975,000 in 1995, primarily resulting from amortization of goodwill
relating to the acquisitions of MMG and Netra.

INCOME FROM OPERATIONS.  The Company had income from operations of $12.4
million in 1996 compared to $16.6 million in 1995, resulting from the
changes in pricing and unit volume discussed above.  Excluding the effect
of Flex Products, income from operations would have been $9.1 million in
1996 compared to income from operations of $12.9 million in 1995.  The Flex
Products operation contributed income from operations of $3.3 million in
1996 compared to $3.7 million for the six month period of consolidation in
1995.

INTEREST INCOME AND EXPENSE. Interest income decreased $288,000 in 1996
compared to 1995.  The 1996 decrease was due to lower average short-term
investments, primarily resulting from a time lag between the cash outlay
for investments versus the completion of financing arrangements. Interest
expense decreased $23,000 in 1996.  Excluding the effect of Flex Products,
interest expense would have increased $231,000 in 1996 over 1995.  The 1996
adjusted increase results from mortgage financing on two new buildings
completed in 1996.  Flex Products' positive impact on interest expense is
due to capitalized interest recorded on significant capital projects in
1996.

PROVISION FOR INCOME TAXES.  The Company's effective income tax rate was
37.0% in 1996 and 40.1% 1995.  The 1996 effective income tax rate decrease
resulted from the recognition of state business tax credits arising from
the purchase of new manufacturing equipment, partially offset by losses
incurred by the Company's subsidiary in Germany for which tax benefits were
not provided.

MINORITY INTEREST.  In 1996, the Company recorded $636,000 as minority
interest representing the share of net income of Flex Products accruing to
its 40% stockholder.

NET INCOME.  The Company had net income of $5.2 million in 1996 compared to
$7.4 million in 1995.  Excluding the results of Flex Products, 1996 net
income would have been $2.9 million compared to 1995 net income of $5.9
million.  Dividends of $960,000 in 1996 and $462,000 in 1995 were paid on
the 8% Convertible Redeemable Preferred Stock issued in connection with the
Flex Products investment transaction.  As a result, consolidated net income
attributable to common stock was $4.2 million for 1996 compared to $6.9
million for 1995.

FACTORS AFFECTING FUTURE PERIODS.  1996 fourth quarter and full year
results were adversely affected by delays in product shipments and
additional expenses resulting from new manufacturing equipment coming on
line more slowly than scheduled.  In addition, 1996 fourth quarter results
were significantly impacted by the results of the Company's German
subsidiary which has experienced weak demand for its office automation
products.  The Company continues to make slow but steady progress in
addressing the manufacturing yields and throughput levels of the new
machines, and steps have been taken to lower the costs of the German
operation. In order to enhance profitability, the Company is aggressively
implementing initiatives to improve safety and manufacturing yields and
decrease cycle times on existing processes and new product development.

FISCAL 1995 COMPARED TO FISCAL 1994

REVENUES.  Revenues for the Company were $169.4 million for its fiscal year
ended October 31, 1995 compared to revenues of $131.8 million in fiscal
1994.  Excluding the results of Flex Products, 1995 revenue would have been
$153.8 million, an increase of $22.0 million, or 17%, over 1994.

Revenues in 1995 for fabricated glass components and precision molded
plastic optics used in office automation applications, filters used in
medical and analytical instrumentation and front surface mirrors used in
office automation and projection television applications were strong in
1995.  Fiscal 1995 revenues also included higher invoicing on the Company's
contract for the coating of the X-ray space telescope project for NASA.
Revenues for the Company's Glare/Guard computer display aftermarket
business declined due to increased competition in the private label segment
and reduced product demand in several European countries.

GROSS PROFIT.  Gross profit as a percent of revenue was 37.4% in 1995
compared to a gross profit percentage of 36.3% in 1994.  Excluding the
results of Flex Products, 1995 gross profit as a percent of revenue would
have been 36.6% which is approximately even with the gross profit
percentage in 1994. During 1995, the Company experienced price decreases
for its office automation products in the United States and for its
GlareGuard products in the United States and Europe.  1995 gross profit
margins were maintained through higher sales volume, production efficiency
gains and manufacturing yield improvements; and for the GlareGuard product
line, through product redesign for cost reduction.

RESEARCH AND DEVELOPMENT.  Research and development expenditures for 1995
increased $3.2 million compared to 1994.  Excluding the results of Flex
Products, the 1995 increase would have been $2.1 million or 40%. The
increase in 1995 was due to increased research and development expenditures
relating to the development of additional continuous platform coating
capacity, development of coatings on plastic for flat panel display
applications and further development of the Company's electrochromic
technology and related products.

SELLING AND ADMINISTRATIVE.  Selling and administrative expenses increased
$6.1 million in 1995 over 1994.  Excluding the results of Flex Products,
the 1995 increase over 1994 would have been $3.9 million or 12%.  The
increase in 1995 over 1994 was due to initial selling expenses associated
with increasing regional sales activities in the United States and Europe
and higher administrative and legal expenses.

The Company recorded amortization of intangibles of $975,000 in 1995 and
$648,000 in 1994 representing the amortization of goodwill relating to the
acquisitions of MMG and Netra.

INCOME FROM OPERATIONS.  As a result of the foregoing changes in revenues
and costs and expenses, the Company had income from operations of $16.6
million in 1995 compared to $10.6 million in 1994.  Excluding the results
of Flex Products, 1995 income from operations would have been $12.9 million
compared to $10.6 million in 1994, an increase of  $2.3 million or 22%.

INTEREST INCOME AND EXPENSE.  Interest income increased $329,000, or 97%,
in 1995 over 1994.  The increase in 1995 was due to higher cash and
temporary investment balances which resulted from the Company's financing
activities during the year.  Interest expense increased $332,000, or 10%,
in 1995 over 1994.  The increase in interest expense for 1995 resulted from
higher debt incurred to finance the investments in additional coating
capacity and in Flex Products.  Fiscal 1995 interest expense was, in part,
offset by higher capitalized interest relating to self-constructed assets.

PROVISION FOR INCOME TAXES.  In 1995  and 1994, the Company's effective
income tax rate was 40.1% which approximates the statutory combined
federal, state and applicable foreign tax rates for the Company.

MINORITY INTEREST.  In 1995, the Company recorded $816,000 as minority
interest representing the share of net income of Flex Products accruing its
40% stockholder for the six month period that the Company consolidated the
results of Flex Products.

NET INCOME.  The Company had net income of $7.4 million in 1995 compared to
$4.6 million in 1994.  Excluding the results of Flex Products, 1995 net
income would have been $5.9 million, an increase of  $1.3 million or 29%
over 1994.  In 1995, dividends of $462,000 were paid on the 8% Convertible
Redeemable Preferred Stock issued in connection with the Flex Products
investment transaction.  As a result, net income attributable to common
stock was $6.9 million for 1995.

INFLATION EFFECT.  Inflation did not have a significant effect on the
operations of the Company during 1996, 1995 or 1994.

FOREIGN CURRENCY.  The Company has significant investments in Germany and
Scotland.  Changes in the value of those countries' currencies relative to
the U.S. dollar are recorded as direct charges or credits to equity.  The
Company also has manufacturing operations in Germany and Scotland and sales
presence in several other European countries.  A significant weakening of
the currencies of those countries in relation to the U.S. dollar could
reduce the reported results of those operations.  A significant amount of
the Company's sales are export sales which could be subject to competitive
price pressures if the U.S. dollar was to strengthen compared to the
currency of foreign competitors.  The Company is exposed to foreign
currency risk on open intercompany balances between the U.S. and certain of
its foreign subsidiaries and on open intercompany balances that some of the
foreign subsidiaries have with each other.  In addition, the Company's
foreign subsidiaries make sales and purchase commitments in currencies
other than their own which exposes them to currency risk on open receivable
and payable balances.  The Company does not consider any of these risks to
be material.

ENVIRONMENTAL MATTERS.  In 1988, the Company discovered ground water
contamination at its facilities in Santa Rosa, California.  With the
assistance of its environmental consultants and under the regulatory
guidance of the California Regional Water Quality Control Board, the
Company established a program for reducing contaminant concentration levels
to acceptable federal and state levels.  In 1996, the California Regional
Water Quality Control Board approved the Company's final remediation plan,
thus establishing the extent of the Company's responsibility for ground
water remediation. In prior years, the Company recorded accruals to cover
the future estimated cost of drilling additional extraction and monitoring
wells and considers those accruals to be adequate.  Ongoing ground water
remediation expenses for the years 1994 through 1996 have not been material
to the operations of the Company, and the Company does not expect them to
be material in the future.

LITIGATION.  The Company has been engaged, over the past several years, in
litigation in the United Kingdom (U.K.) involving infringement of a Company
patent by a U.K. company.  The Company won its action at the Patents County
Courts level but lost on appeal to the U.K. House of Lords.  During the
injunction period, the U.K. Company submitted a claim for damages totaling
approximately $1.6 million for lost profits.  The Company and legal counsel
are in the process of reviewing the claim.  Management believes that the
amount of the claim is substantially overstated and that the ultimate
settlement will not have a material adverse effect on its future operating
results.

COMMITMENTS.  During the first quarter of 1997, the Company initiated an
innovative program to modernize its business processes in order to reduce
cycle time and improve profitability.  The program is being deployed
worldwide with the goal of streamlining, automating and applying best
practices to all of the Company's business processes.  In conjunction with
this initiative, the Company identified the need for a state-of-the-art
Enterprise Resource Planning System, selected a product and made a
commitment to a vendor for hardware and software requirements.  Expected
total cost of the system, including hardware, software, training and
consulting, is approximately $4.3 million, of which the Company has
committed $1.9 million for hardware and software which is expected to be
financed under a five year operating lease with monthly payments of
approximately $50,000 commencing in the fourth quarter of 1997.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.  Except for historical information contained in this report, matters
discussed in this report are forward-looking statements that involve risks
and uncertainties.  Actual results may vary significantly based on a number
of factors including, but not limited to, product development,
commercialization and technological difficulties; manufacturing costs and
yield issues associated with initiating production at new facilities; the
impact of competitive products and pricing; changing customer requirements;
and the change in economic conditions of the various markets the Company
serves.

ACQUISITION AND INVESTMENT TRANSACTIONS

FLEX PRODUCTS, INC.  In May 1995, the Company acquired controlling
ownership of Flex Products with the purchase of an additional 20% interest
in Flex Products from ICI Americas Inc. (ICIA), an affiliate of Imperial
Chemical Industries PLC.  Flex Products was founded as a division of the
Company in the early 1980's and subsequently established as a joint venture
between the Company and ICIA in 1988, with ICIA owning 60% and the Company
owning 40%.  In conjunction with the Company's increase in ownership,
ICIA's remaining 40% interest in Flex Products was acquired by SICPA
Holding S.A. (SICPA), a privately held Swiss Corporation headquartered in
Lausanne, Switzerland.  SICPA is the world's largest manufacturer of
printing inks and a major customer of Flex Products.

Pursuant to the terms of the Stock and Note Purchase Agreement dated May
1, 1995 by and among the Company, SICPA, ICIA and Flex Products, the
Company acquired an incremental 20% interest in Flex Products for a cash
payment of $8.4 million and paid an affiliate of ICIA approximately $7.0
million in cash to acquire a 60% interest in an $11.7 million promissory
note previously issued by Flex Products to ICIA to fund Flex Products'
working capital requirements.  SICPA acquired a 40% equity interest in Flex
Products and the balance of the $11.7 million promissory note.

In connection with this transaction, the Company entered into a Put and
Call, Right of First Refusal and Co-Sale Agreement with SICPA pursuant to
which SICPA was granted a call option to purchase the Company's 60%
interest in Flex Products and the Company was granted a put option to sell
the Company's 60% interest in Flex Products to SICPA.  The call price is
$25 million plus (i) two times the amount by which Flex Products' annual
sales immediately preceding the call exceed $23.6 million (ii) times 60%
(the Company's ownership percentage of Flex Products). The put price is $20
million plus (i) 1.5 times the same increase in Flex Products' sales (ii)
times 60%. The put and call options can be exercised at any time after May
8, 1998 and before May 8, 2003, and cannot be exercised in the event Flex
Products goes public.  This agreement also provides for a right of first
refusal in favor of each party to buy the other's shares and also provides
a co-sale right which requires that on any sale of a party's shares, the
other party is allowed to participate on a pro rata basis in the sale.

The agreement with SICPA also provides conditions under which the above
mentioned put and call and right of first refusal would be terminated upon
an underwritten public offering of the securities of Flex Products.

In July of 1996, SICPA filed a lawsuit in Delaware Chancery Court in order
to block an attempted initial public offering by Flex Products arguing that
such an offering was prohibited by Flex Products' articles of
incorporation, as well as by certain contractual provisions between OCLI
and SICPA, without SICPA's consent.  In January 1997, the Delaware Chancery
Court rendered a decision on one of the issues in dispute, upholding the
position of OCLI and Flex Products that a simple majority of the Flex
Products Board of Directors has the authority to authorize a public
offering of Flex Products' securities.  The lawsuit did not have, nor is it
expected to have, an impact on Flex Products' operations or on the sale of
product to SICPA given the proprietary nature of the product and the 15
year exclusive supply contract between Flex Products and SICPA which
requires SICPA to make annual minimum purchases from Flex Products or to
pay liquidated damages in the event that such minimum purchases are not
satisfied.

NETRA CORPORATION. In February 1995, the Company acquired the assets and
liabilities of Netra Corporation, a precision molded plastic component
manufacturer, for a total purchase price of approximately $3.1 million.
The purchase price consisted of a cash payment of $1.5 million and the
balance of approximately $1.6 million paid by the issuance of 164,735
shares of the Company's common stock to the sellers.  Upon completion of
the acquisition, Netra was relocated from its facilities in Mountain View,
California to a facility immediately adjacent to the Company's principal
manufacturing site in Santa Rosa, California.

FINANCIAL CONDITION AND LIQUIDITY

In 1996, the Company's cash and short-term investment position increased by
$9.4 million, resulting primarily from cash generated by operations of
$20.2 million, proceeds from sale/lease-back arrangements on new equipment
of $18.9 million, new debt issuance net of repayment of $1.6 million and
proceeds from exercise of stock options of $1.7 million, offset by
investments in plant and equipment of $30.5 million, payment of dividends
on preferred stock of $960,000 and payment of dividends on common stock of
$1.2 million.  At fiscal year end 1996, the Company had cash and short-term
investments totaling $16.0 million.  In addition, the Company has available
domestically a $15 million revolving line of credit and separate credit
arrangements in place for the operating requirements of its subsidiaries in
Germany and Scotland.

During 1996, the Company entered into three sale/lease-back arrangements
for a newly acquired continuous coating machine and related equipment and
for two newly acquired coating machines to be used in the manufacturing
operations of Flex Products.  The lease terms are six years with monthly
payments totaling approximately $290,000 and  buyout provisions at the end
of each lease.

For the fourth quarter of 1996, Flex Products was granted a waiver for one
of its financial covenants.  The Company believes Flex Products will need
continued relief under this covenant for fiscal 1997 and is in negotiations
with the lessor to obtain an amendment to the covenant.

In 1996, the Company entered into a $2.6 million mortgage loan agreement on
a newly constructed 72,000 square foot manufacturing building.  The loan
carries a fixed interest rate of 8% and is repayable over 15 years in
monthly installments of approximately $25,000.

Also in 1996, the Company entered into a $3.0 million mortgage loan
agreement for a newly constructed 65,000 square foot manufacturing and
office building leased by Flex Products.  The loan carries a fixed interest
rate of  7.5% and is repayable over 15 years in monthly installments of
approximately $28,000.

In 1995, cash and short-term investments decreased $13.1 million primarily
due to investments in plant and equipment of $30.9 million, the purchase of
additional equity interest and note of Flex Products totaling $15.2
million, and the purchase of Netra of $1.5 million offset by cash generated
from operations of $13.1 million, proceeds from issuance of preferred stock
of $11.4 million and proceeds from long-term debt net of debt repayment of
$9.8 million.  Cash and short-term investments at the end of fiscal 1995
were $6.6 million.

During 1995, the Company increased the amount of and extended the term of
its primary bank credit agreement to provide a $30 million unsecured credit
facility comprised of a $15 million term loan and a $15 million revolving
line of credit. In addition, in connection with the Flex Products
investment transaction and to increase the equity component of the
Company's capital structure, the Company issued $12 million of 8%
Convertible Redeemable Preferred Stock.

In 1996, the Company's working capital, excluding cash and short-term
investments, increased by $647,000.  Increased inventory (due to product
mix changes) and decreased  accounts payable and accrued expenses
(primarily due to decreased spending and construction activity at the end
of 1996) was almost completely offset by decreased accounts receivable (due
to more aggressive collection efforts) and changes in net current tax
assets and liabilities (due to the utilization of loss carryforwards and
refunds).  In 1995, the Company's working capital, excluding cash and short-
term investments, had increased by $12.4 million due primarily to the
consolidation of Flex Products and the acquisition of  Netra.

Management believes that the cash on hand at October 31, 1996, cash
anticipated to be generated from future operations, new lease agreements
and the available funds from revolving credit arrangements will be
sufficient for the Company to meet its near-term working capital needs,
capital expenditures, debt service requirements and payment of dividends as
declared.

                                        
              OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                                        

ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND
          SUPPLEMENTAL FINANCIAL INFORMATION
                                        
INDEX
                                                              PAGE(S)

Report of Independent Auditors                                 22

Consolidated Balance Sheets as of October 31, 1996 and 1995    23

Consolidated Statements of Income for the years ended 
 October 31, 1996,1995 and 1994                                24

Consolidated Statements of Cash Flows for the years 
 ended October 31, 1996,1995 and 1994                          25-26

Consolidated Statements of Common Stockholders' Equity 
 for the years ended October 31, 1996, 1995 and 1994           27

Notes to Consolidated Financial Statements                     28

Supplemental Financial Information
  (Quarterly Financial Information 
  for 1996 and 1995 - Unaudited)                               40-41



INDEPENDENT AUDITORS' REPORT



Board of Directors
Optical Coating Laboratory, Inc.
Santa Rosa, California

We have audited the accompanying consolidated balance sheets of Optical
Coating Laboratory, Inc. and subsidiaries (the Company) as of October 31,
1996 and 1995, and the related consolidated statements of operations,
common stockholders' equity and cash flows for each of the three years in
the period ended October 31, 1996.  These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.  We
did not audit the financial statements of Flex Products, Inc., who became a
consolidated subsidiary effective May 1, 1995 and whose assets represent
11% and 9%, respectively, of consolidated total assets at October 31, 1996
and 1995, and whose total revenues for the year ended October 31, 1996 and
for the period from May 1, 1995 to October 31, 1995 represent 15% and 9%,
respectively, of consolidated total revenues for the years ended October
31, 1996 and 1995.  The financial statements of Flex Products, Inc. were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for Flex Products,
Inc., is based solely on the report of such other auditors.

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

In our opinion, based on our audits and the report of the other auditors,
such consolidated financial statements present fairly, in all material
respects, the financial position of Optical Coating Laboratory, Inc. and
its subsidiaries at October 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended October 31, 1996 in conformity with generally accepted accounting
principles.

DELOITTE & TOUCHE LLP


San Jose, California
December 18, 1996

                                        
                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

As of October 31, 1996 and 1995
(Amounts in thousands)

ASSETS                                                    1996     1995

CURRENT   Cash and short-term investments              $16,027  $ 6,602
ASSETS    Accounts receivable, net of allowance for
          doubtful accounts of $1,775 and $1,229        27,700   29,565
          Inventories                                   18,701   15,886
          Income taxes receivable                        1,248       38
          Deferred income tax assets                     5,165    6,665
          Other current assets                           1,230    2,438
           Total Current Assets                         70,071   61,194

OTHER     Deferred income tax assets                     4,451    4,597
ASSETS    Other assets and investments                  10,680   12,432

PROPERTY, Land and improvements                          9,200    8,651
PLANT AND Buildings and improvements                    40,953   31,461
EQUIPMENT Machinery and equipment                      112,326  101,586
          Construction-in-progress                       6,190   23,717
                                                       168,669  165,415
          Less accumulated depreciation                (81,100) (73,804)
           Property, plant and equipment-net            87,569   91,611
                Total Assets                          $172,771 $169,834

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT   Accounts payable                            $  7,199 $ 10,324
LIABILI-  Accrued expenses                               6,566    9,515
TIES      Accrued compensation expenses                  7,057    6,559
          Income taxes payable                           1,823
          Current maturities on long-term debt           4,981    3,344
          Notes payable                                  3,112    3,339
          Deferred revenue                               1,246       98
                Total Current Liabilities               31,984   33,179

NON-      Accrued postretirement health benefits
CURRENT    and pension liabilities                       2,308    2,150
LIABILI-  Deferred income tax liabilities                1,804    2,239
TIES      Long-term debt                                45,788   47,267
          Commitments and contingencies (Note 10)
          Minority interest                             11,328   11,105
          Convertible redeemable preferred stock        11,309   11,357

COMMON    Common stock, $.01 par value; authorized
STOCK-     30,000,000 shares; issued and outstanding
HOLDERS'   9,761,000 and 9,489,000 shares                   98       95
EQUITY    Paid-in capital                               47,219   44,461
          Retained earnings                             20,984   17,901
          Cumulative foreign currency 
           translation adjustment                          (51)      80
           Common Stockholders' Equity                  68,250   62,537
                Total Liabilities and 
                  Stockholders' Equity                $172,771 $169,834

The accompanying notes are an integral part of these financial statements.
                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                                        
Years ended October 31, 1996, 1995 and 1994
(Amounts in thousands, 
except per share amounts)                     1996         1995         1994

REVENUES  Revenues                        $189,195     $169,417     $131,780
          Cost of sales                    126,769      106,009       84,001
            Gross Profit                    62,426       63,408       47,779

COSTS AND Operating Expenses:
EXPENSES  Research and development          11,733        8,401        5,229
          Selling and administrative        37,145       37,462       31,341
          Amortization of intangibles        1,146          975          648
           Total Operating Expenses         50,024       46,838       37,218

            Income from Operations          12,402       16,570       10,561

          Nonoperating Income (Expense):
          Interest income                      379          667         338
          Interest expense                  (3,524)      (3,547)     (3,215)

EARNINGS  Income Before Provision for 
           Income Taxes
           and Minority Interest             9,257       13,690       7,684

          Provision for income taxes         3,425        5,483       3,080
          Minority interest                    636          816     
            Net Income                       5,196        7,391       4,604

          Dividend on convertible
          redeemable preferred stock          960           462

            Net Income Applicable 
             to Common Stock              $ 4,236       $ 6,929     $ 4,604

          Net Income Per Common and
           Common Equivalent Share        $   .41       $   .73     $   .51

          Weighted average number of 
           common shares used to 
           compute earnings per share      10,301        9,510        9,023



The accompanying notes are an integral part of these financial statements.
                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


Years ended October 31, 1996, 1995 and 1994
(Amounts in thousands, 
except per share amounts)                          1996     1995       1994

OPERA-   Cash Flows From Operations:
TIONS     Cash received from customers         $191,665  $162,568   $133,125
          Interest received                         258       733        268
          Cash paid to suppliers 
           and employees                       (165,565) (139,489)  (112,341)
          Cash paid to ESOP+                                 (406)      (947)
          Interest paid                          (5,196)   (3,730)    (2,567)
          Income taxes paid, net of refunds        (954)   (6,625)      (986)
                Net Cash Provided By Operations  20,208    13,051     16,552

INVEST-  Cash Flows From Investments:
MENTS     Purchase of plant and equipment       (30,530)  (30,911)    (8,821)
          Proceeds from sale-leaseback of 
           new equipment                         18,940
          Purchase of additional equity 
           interest and note of Flex 
           Products, net of cash
           from consolidation                             (15,185)
          Cash portion of payment for 
           purchase of Netra, net of 
           cash acquired                                   (1,477)
                Net Cash Used For Investments   (11,590)  (47,573)    (8,821)

FINANCING Cash Flows From Financing:
          Net proceeds from issuance 
           of preferred stock                              11,357
          Proceeds from long-term debt            8,596    21,542      4,005
          Proceeds from issuance of 
           senior notes                                               18,000
          Proceeds from notes payable                 8       494        283
          Proceeds from exercise of 
           stock options                          1,713     1,627         16
          Repayment of long-term debt            (7,019)  (11,700)   (11,327)
          Repayment of notes payable                         (388)      (400)
          Repayment of note to 
           minority stockholder,
           net of amounts borrowed                 (413)
          Payment of dividend on 
           preferred stock                         (960)     (462)
          Payment of dividend on common stock    (1,153)   (1,083)    (1,075)
                Net Cash Provided By Financing      772    21,387      9,502
          Effect of exchange rate changes on cash    35        74        146
          Increase (decrease) in cash and 
           short-term investments                 9,425   (13,061)    17,379
          Cash and short-term investments at 
           beginning of year                      6,602    19,663      2,284
          Cash and short-term investments 
           at end of year                       $16,027    $6,602    $19,663
                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Years ended October 31, 1996, 1995 and 1994
(Amounts in thousands)                             1996     1995       1994

ADJUST-   Reconciliation of Net Income 
MENTS      To Cash Flows From Operations:

          Net income                             $5,196    $7,391    $4,604

          Adjustments to reconcile 
           net income to net cash
           provided by operations:
            Depreciation and amortization        13,669    10,261    7,635
            Minority interest in earnings 
             of Flex Products                       636       816
            Net book value of coating 
             machine sold                           880
            Loss on disposal or abandonment 
             of equipment                         1,356       914      634
            Accrued postretirement 
             health benefits                        184       238       76
            Deferred income tax liabilities        (468)    2,515   (1,650)
            Other non-cash adjustments 
             to net income                         (681)       46      (98)

            Change in:
             Accounts receivable                  1,378    (3,792)    (973)
             Inventories                         (3,030)   (2,391)   1,572
             Income tax receivable                 (719)      (76)   2,045
             Deferred income tax assets           1,645    (2,237)     275
             Other current assets and other 
              assets and investments                716    (1,547)    (312)
             Accounts payable, accrued 
              expenses and accrued 
              compensation expenses              (3,094)    2,807    1,230
             Deferred revenue                       464      (538)     (28)
             Income taxes payable                 2,076    (1,356)   1,542
               Total adjustments                 15,012     5,660   11,948

                Net Cash Provided 
                 By Operations                  $20,208   $13,051  $16,552

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During 1995, the Company acquired Netra Corporation for approximately $1.5
million in cash and the issuance of approximately $1.6 million in Company
common stock.  Cash and non-cash components of the acquisition were as
follows:

 (Amounts in thousands)

Fair value of assets acquired, including intangibles      $3,529
Cash acquired                                               (188)
Liabilities assumed                                         (279)
                                                          $3,062

Cash paid to sellers, net of cash acquired                $1,477
OCLI common stock issued to sellers                        1,585
                                                          $3,062

In 1996, 1995 and 1994, common stock, with an aggregate fair market value
of $52,000, $30,000 and $20,000 was awarded to the Company's outside
directors as remuneration.

During 1996, the Company issued 39,880 shares of common stock to its
Employee Stock Ownership Plan (ESOP+) at fair market value to satisfy a
portion of its Company contribution.

The accompanying notes are an integral part of these financial statements.
                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
                                        
Years ended October 31, 1996, 1995 and 1994             
<TABLE>
<S>                                           <C>          <C>      <C>      <C>         <C>
                                                                                      Foreign
                                              Common Stock       Paid-in  Retained    Currency
(Amounts in thousands)                      Shares      Amount   Capital  Earnings    Translation

          BALANCE AT NOVEMBER 1, 1993        8,972       $90     $39,930   $8,526      $(1,411)
ACTIVITY  Exercise of stock options and
IN FISCAL warrants, including tax benefit
1994      and shares issued to directors         6                    37
          Foreign currency translation
           adjustment for the year                                                       1,336
          Net income for the year                                           4,604
          Dividend on common stock                                         (1,075)
          
          BALANCE AT OCTOBER 31, 1994        8,978        90      39,967   12,055          (75)

ACTIVITY  Shares issued on purchase of Netra   165         1       1,584
IN FISCAL Shares issued to Employee Stock
1995       Ownership Plan                       82         1         794
          Exercise of stock options,
           including tax benefit and
           shares issued to directors          264         3       2,116
          Foreign currency translation
           adjustment for the year                                                         155
          Net income for the year                                           7,391
          Dividend on preferred stock                                        (462)
          Dividend on common stock                                          (1,083)

          BALANCE AT OCTOBER 31, 1995        9,489        95      44,461    17,901         80

ACTIVITY  Shares issued to Employee Stock
IN FISCAL  Ownership Plan                       39         1         439
1996      Exercise of stock options,
           including tax benefit and
           shares issued to directors          233         2       2,319
          Foreign currency translation
           adjustment for the year                                            (131)
          Net income for the year                                  5,196
          Dividend on preferred stock                               (960)
          Dividend on common stock                                (1,153)

          BALANCE AT OCTOBER 31, 1996        9,761      $98      $47,219   $20,984              $(51)

</TABLE>
The accompanying notes are an integral part of these statements.
                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   Years Ended October 31, 1996, 1995 and 1994
                (Amounts in thousands, except per share amounts)

1.   GENERAL

NATURE OF OPERATIONS.  Optical Coating Laboratory, Inc. (OCLI) designs,
develops and manufactures thin film coated products which control and
enhance light by altering the transmission, reflection and absorption of
its various wavelengths to achieve a desired effect. OCLI markets and sells
its products worldwide to original equipment manufacturers (OEMs) who
utilize thin film coated components or devices for optical and electro-
optical systems for their products including computers, photocopiers, LCD
and digital light processing projector systems, document scanners, point-of-
sale scanners, instruments and satellites.  OCLI sells its Glare/Guard
ergonomic computer display products through distributors and office supply
retailers.  Flex Products, Inc. (Flex Products), OCLI's 60% owned
subsidiary, develops and manufactures thin film coatings on plastic film
with a proprietary, high speed process.

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

CERTAIN SIGNIFICANT ESTIMATES. At October 31, 1996, the Company had
significant deferred tax assets related to operating losses available for
carryforward.  These deferred tax assets have been recorded under the
guidelines of SFAS No. 109, Accounting for Income Taxes, on the premise
that future taxable income will more likely than not be adequate to realize
future tax benefits of the available net operating loss carryforwards.
Under tax regulations, realization of tax benefits per period will be
limited and full realization will depend on future taxable income over a
number of years. As discussed in Note 10, the Company is subject to an
asserted claim for lost profits made in the United Kingdom by a U.K.
company relating to a court enforced injunction and finding for the Company
that has been reversed by a higher court.  The Company has ground water
contamination at its facility in Santa Rosa, California.  The Company has
established a program for reducing contaminant concentration levels to
acceptable federal and state levels under the regulatory guidance of the
California Regional Water Quality Control Board.  Based upon the extensive
tests conducted and advice of environmental consultants, the Company
believes that the recorded liability for completion of the ground water
remediation plan is sufficient and that the annual cost of maintaining
compliance with environmental standards related to the above matter will
not have a material adverse effect on the Company's business, financial
position or future operating results.

2.   SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION.  The consolidated financial statements include
the accounts of the Company and its wholly and majority owned subsidiaries.
All significant intercompany accounts and transactions have been
eliminated. The Company's fiscal year ends on the Sunday closest to the
last day in October.  Fiscal year 1996 was a 53 week year and fiscal years
1995 and 1994 were 52 week years.

INVESTMENTS. Cash and short-term investments are comprised of cash, bank
repurchase agreements and short-term commercial paper readily convertible
to cash. Short-term investments are carried at cost which approximates
market value. For purposes of the Statements of Cash Flows, all highly
liquid short-term investments with a maturity of three months or less are
considered cash  equivalents.

REVENUE RECOGNITION. Revenue from sales of manufactured products and from
sales under fixed-price contracts is recorded at the time deliveries are
made or work is performed.  Revenue from cost reimbursement contracts is
recorded as work is performed.

INVENTORIES.  Inventories are stated at the lower of cost, on a first-in,
first-out basis, or market.  Work-in-process inventories related to fixed-
price contracts are stated at the accumulated cost of material, labor and
manufacturing overhead, less the estimated cost of units delivered.  To the
extent total costs under fixed-price contracts are estimated to exceed the
total sales price, charges are made to current operations to reduce
inventoried costs to net realizable value.  In addition, if future costs
are estimated to exceed future revenues, an allowance for losses equal to
the excess is provided by a charge to current operations.

PROPERTY, PLANT AND EQUIPMENT.  Property, plant and equipment are stated at
cost.  Estimated service lives range from 5 to 45 years for buildings and
improvements and from 3 to 8 years for all other property, plant and
equipment. Buildings and improvements and substantially all equipment are
depreciated using accelerated methods.

RESEARCH AND DEVELOPMENT. Research and development costs are charged to
operations in the year incurred.  The cost of equipment used in research
and development activities which has alternative uses is capitalized as
equipment and not treated as an expense of the period. Such equipment is
depreciated over estimated lives of 5 years.

FOREIGN OPERATIONS.  The financial position and operating results of
foreign operations are consolidated using the local currency as the
functional currency. Local currency assets and liabilities are translated
at the rate of exchange to the U.S. dollar on the balance sheet date, and
the local currency revenues and expenses are translated at average rates of
exchange to the U.S. dollar during the period.  Resulting translation gains
or losses are included in stockholders' equity under cumulative foreign
currency translation adjustment.  Foreign currency transaction gains and
losses, which have not been material, are reflected in operating results.

INCOME TAXES. Income taxes include provisions for temporary differences
between earnings for financial reporting purposes and earnings for income
tax purposes under the guidelines of SFAS No. 109, Accounting for Income
Taxes, adopted by the Company in fiscal 1992.  Tax credits are taken as a
reduction of current income tax provisions when available.

EARNINGS PER SHARE. Earnings per common and common equivalent share assumes
dilutive stock options outstanding were exercised at the beginning of the
year or the date of grant, whichever is later. Fully diluted earnings per
share is not presented as it is not materially different from primary
earnings per share.

RECLASSIFICATIONS.  Certain reclassifications have been made to prior year
data to conform to the current year presentation.

3.   LONG-TERM DEBT

Long-term debt, including current maturities, at October 31, 1996 and 1995
consisted of the following:

(Amounts in thousands)                                  1996         1995

Unsecured senior notes. Interest 
  at 8.71% payable semiannually.
  Principal payable in annual 
  installments of $3.6 million from
  1998 through 2002.                                  $18,000      $18,000

Unsecured borrowings under revolving 
  bank line of credit repaid in 1996.                                2,000

Unsecured bank term loan. Variable 
  interest rates averaging 6.5%
  at October 31, 1996, payable 
  quarterly. Principal payable
  semiannually as follows:

  Payment Dates          Amounts
  April 1997           $1,000,000
  Each October and 
   April thereafter    $2,000,000                      13,000       14,500

Mortgage payable.  Interest at 8%. 
  Collateralized by a 72,000 sq. ft. 
  newly constructed building and related
  land.  Principal and interest payments0 
  of $25,000 per month through 2011.                    2,523

Mortgage payable.  Interest at 7.5%. 
  Collateralized by a 65,000 sq. ft. newly 
  constructed building and related
  land leased to Flex Products.  Principal 
  and interest payments of $28,000 per 
  month through 2011.                                  2,945

Land improvement assessment. Interest at 
  an average rate of 6.75%.
  Principal and interest payable 
  in semiannual installments of
  $77,000 through 1998.                                  276           401

Scottish Development Agency (SDA) 
  building loan, with a conditional
  interest moratorium from February 1, 1995 
  through January 31, 1998 with interest at 
  9.5% thereafter. Semiannual principal 
  payments of approximately $100,000 are 
  payable through January 1998 with
  subsequent payments of $331,000, 
  comprising principal and interest, through 
  2006. Collateralized by the land and 
  building of the Company's Scottish subsidiary.       3,996         4,026

Notes payable to private parties in 
  connection with the purchase of
  the Company's wholly-owned subsidiary 
  in Germany (MMG). Principal and interest 
  at 8% payable over ten years in quarterly
  installments of approximately $420,000 
  through 2003.                                        6,188         7,721

Bank loans of MMG with interest rates 
  ranging from 4.5% to 8.0%. Payable in 
  semiannual and annual installments through 2005.
  Partly collateralized by mortgages on MMG 
  land and buildings and liens on equipment.           3,760         3,050

Present value of obligations under capital 
  leases at an imputed interest rate of 8.0% 
  payable in monthly installments through 2004.           81           913
                                                      50,769        50,611
Less current maturities                               (4,981)       (3,344)
     Total long-term debt, 
       net of current maturities                     $45,788       $47,267



Annual long-term debt maturities and capital lease payments for the ensuing
five years are as follows:

                    YEAR             PAYMENT
                     (Amounts in thousands)

                    1997            $4,981
                    1998            10,204
                    1999             9,414
                    2000             7,322
                    2001             5,294
                    Thereafter      13,554
                                   $50,769

The Company has a $30 million unsecured credit facility comprised of a $15
million term loan and a $15 million revolving line of credit. The revolving
line of credit carries a commitment fee of .375% per year on the unused
portion of the facility and expires on April 28, 2000. The Company has an
incremental credit facility to cover a surety letter for approximately $3.1
million issued to secure 50% of the Company's notes payable arising from
the purchase of MMG.  The Company also has a letter of credit for
approximately $775,000 to satisfy the Company's workers' compensation self-
insurance requirements.  The surety commitment and letter of credit
facilities carry a fee of 1.25% per year.

The Company's subsidiary in Scotland has a credit arrangement of up to
approximately $490,000 at market interest rates and has outstanding letters
of credit of approximately $330,000 to guarantee import duty.  There were
no borrowings under the credit arrangement in fiscal years 1996 or 1995.

The Company's subsidiary in Germany has various credit facilities with
local banks totaling approximately $3.1 million which are used for working
capital requirements.  These credit facilities are utilized as part of
normal local payment practices.

During 1996, the Company entered into three sale/lease-back arrangements
for a newly acquired continuous coating machine and related equipment and
for two newly acquired coating machines to be used in the manufacturing
operations of Flex Products.  The lease terms are six years with monthly
payments totaling approximately $290,000 and  buyout provisions at the end
of each lease.

For the fourth quarter of 1996, Flex Products was granted a waiver for one
of its financial covenants.  The Company believes Flex Products will need
continued relief under this covenant for fiscal 1997 and is in negotiations
with the lessor to obtain an amendment to the covenant.

The Company has certain financial covenants and restrictions under its bank
credit arrangements and the unsecured senior notes.

4.   ACQUISITIONS

FLEX PRODUCTS, INC.  In May 1995, the Company acquired controlling
ownership of Flex Products with the purchase of an additional 20% interest
in Flex Products from ICI Americas Inc. (ICIA), an affiliate of Imperial
Chemical Industries PLC. Flex Products was founded as a division of the
Company in the early 1980's and subsequently established as a joint venture
between the Company and ICIA in 1988, with ICIA owning 60% and the Company
owning 40%. Upon formation of the 1988 joint venture, the Company received
proceeds in excess of the carrying amount of the assets contributed to the
joint venture. The proceeds were allocated first to reduce the carrying
amount of the Company's investment to zero, with the remaining proceeds
reported as gain on sale of equity in affiliated company.  Since the
Company carried its investment in the joint venture at zero and was not
obligated to make further investment in the joint venture, it did not
recognize losses attributable to its equity position in the joint venture.

Pursuant to the terms of the Stock and Note Purchase Agreement dated May 1,
1995, by and among the Company, SICPA Holding S.A. (SICPA), ICIA, ICIAH and
Flex Products, the Company acquired an incremental 20% interest in Flex
Products for a cash payment of $8.4 million and paid ICIAH approximately
$7.0 million in cash to acquire a 60% interest in an $11.7 million
promissory note previously issued by Flex Products to ICIA to fund Flex
Products' working capital requirements. In conjunction with the Company's
increase in ownership, ICIA's remaining 40% interest in Flex Products was
acquired by SICPA, a privately held Swiss corporation headquartered in
Lausanne, Switzerland. SICPA is the largest manufacturer of printing inks
in the world and the major customer of Flex Products. SICPA also acquired
the balance of the note. The incremental investment in Flex Products was
recorded as a purchase transaction.

The funding for the purchase of the additional equity interest and note of
Flex Products, totaling $15.4 million, came from a $4 million draw down
from the Company's existing bank line of credit and from the issuance of
$12 million in convertible redeemable preferred stock in a private
placement.

The following pro forma consolidated results of operations for 1995 and
1994 include the operating results of Flex Products, assume that effective
tax rates were consistent with statutory rates and incorporate the effect
of financing the transaction:

(Amounts in thousands)                                     1995      1994
Revenue                                                $181,389  $154,288
Net income before change in accounting principle          7,847     4,550
Net income applicable to common stock                     6,887     3,521
Net income per common and common equivalent share          $.72      $.39

In connection with this transaction, the Company entered into a Put and
Call, Right of First Refusal and Co-Sale Agreement with SICPA pursuant to
which SICPA was granted a call option to purchase the Company's 60%
interest in Flex Products and the Company was granted a put option to sell
the Company's 60% interest in Flex Products to SICPA.  The call price is
$25 million plus (i) two times the amount by which Flex Products' annual
sales immediately preceding the call exceed $23.6 million (ii) times 60%
(the Company's ownership percentage of Flex Products). The put price is $20
million plus (i) 1.5 times the same increase in Flex Products' sales (ii)
times 60%. The put and call options can be exercised at any time after May
8, 1998 and before May 8, 2003, and cannot be exercised in the event Flex
Products completes a public offering.  This agreement also provides for a
right of first refusal in favor of each of SICPA and the Company to buy the
other's shares and also provides a co-sale right which requires that on any
sale of a party's shares, the other party is allowed to participate on a
pro rata basis in the sale.

The Agreement with SICPA also provides conditions under which either party
may cause Flex Products to have an initial public offering of its common
stock.

In July of 1996, SICPA filed a lawsuit in Delaware Chancery Court in order
to block an attempted initial public offering by Flex Products arguing that
such an offering was prohibited by Flex Products' articles of
incorporation, as well as by certain contractual provisions between OCLI
and SICPA without SICPA's consent.  In January 1997, the Delaware Chancery
Court rendered a decision on one of the issues in dispute, upholding the
position of OCLI and Flex Products that a simple majority of the Flex
Products Board of Directors has the authority to authorize a public
offering of Flex Products' securities prior to May 8, 1998, independent of
the rights of either SICPA or OCLI to cause Flex Products to have an
initial public offering of its common stock created under the Put and Call,
Right of First Refusal and Co-Sale Agreement. The lawsuit did not have, nor
is it expected to have, an impact on Flex Products' operations or on the
sale of product to SICPA given the proprietary nature of the product and
the 15 year exclusive supply contract between Flex Products and SICPA which
requires SICPA to make annual minimum purchases from Flex Products or to
pay liquidated damages in the event that such minimum purchases are not
satisfied.

NETRA CORPORATION.  In February 1995, the Company acquired the assets and
liabilities of Netra Corporation, a precision injection molded plastic
optics manufacturer, for a total purchase price of approximately $3.1
million.  The purchase price consisted of a cash payment of $1.5 million
and the balance of approximately $1.6 million paid by the issuance of
164,735 shares of the Company's common stock. The acquisition was recorded
as a purchase. If the acquisition of Netra had occurred at the beginning of
fiscal 1995, the results of operations would not have been materially
different.

GOODWILL. At October 31, 1996, other assets and investments includes $6.9
million of goodwill, of which $5.9 million is attributed to the purchase of
MMG and is being amortized over fifteen years and $1.0 million is
attributed to the purchase of Netra and is being amortized over five years.

5.   STOCKHOLDERS' EQUITY

STOCKHOLDER RIGHTS PLAN.  In November 1987, the Company adopted a
Stockholder Rights Plan which expires in November 1997, under which the
Company declared a dividend of preferred stock purchase rights which only
become exercisable, if not redeemed, ten days after a person or group has
acquired 20% or more of the Company's common stock or the announcement of a
tender offer which would result in a person or group acquiring 30% or more
of the Company's common stock.  Under certain circumstances, the plan
allows stockholders, other than the acquiring person or group, to purchase
the Company's common stock or the common stock of the acquirer having a
market value of twice the exercise price.

PREFERRED STOCK. The Company has authorized 100,000 shares of preferred
stock at $.01 par value of which 10,000 shares were designated Series A
Preferred Stock in connection with the Company's Stockholder Rights Plan.
None of the Series A Preferred Stock is issued.  Additionally, 15,000
shares were designated Series B Preferred Stock, of which 8,350 shares were
issued and subsequently converted to common stock on call for redemption.
None of the Series B Preferred Stock is currently issued and outstanding.

In May 1995, as part of the financing of the acquisition of a controlling
interest in Flex Products, Inc., the Company issued 12,000 shares of 8%
Series C Convertible Redeemable Preferred Stock (the "Series C Preferred
Stock") in consideration for $1,000 per share.  The Series C Preferred
Stock is convertible into common stock at any time by the holders at a
conversion price of $10.50 per common share (subject to adjustment in
certain circumstances).  The Series C Preferred Stock is redeemable by the
Company commencing two years from the date of issuance (if the Company's
common stock is trading at $17 per share or more for any 20 consecutive day
period) and, after three years, unconditionally, at 108% of the purchase
price per share, declining to 100% over four years. The holders of the
Series C Preferred Stock are entitled to receive a cumulative annual
dividend of $80 per share, which is payable quarterly and has preference to
any other dividends being paid by the Company.

The holders of shares of Series C Preferred Stock are not entitled to
notice of any stockholders' meetings or to vote on any matter, except as
provided by law or as otherwise specified in the Series C Preferred Stock
Certificate of Designation, Preferences and Rights.  If, however, dividends
on the Series C Preferred Stock are in arrears in an amount equal to four
quarterly dividends, a default period would begin in which the holders of
the Series C Preferred Stock, voting as a class, would have the right to
elect the greater of 2 directors or a number of directors not less than 25%
of the total number of authorized directors.  Such right terminates upon
expiration of the default period.  The holders of the Series C Preferred
Stock are entitled to a liquidation preference equal to $1,000 per share
plus accrued and unpaid dividends.  The Company may not create any series
or class of capital stock ranking prior or equal to the Series C Preferred
Stock unless the terms of any such series or class is approved by the
holders of not less than sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Series C Preferred Stock, voting separately as a
class.

Pursuant to the terms of a Stock Purchase Agreement entered into with the
holders of the Series C Preferred Stock, the Company may not pay any
dividends or make any other distributions in respect of, or redeem or
repurchase any, securities of the Company to the extent such payments
exceed 25% of the difference between (a) aggregate "Net Income" (as such
term is defined in the Stock Purchase Agreement) of the Company after
January 31, 1995 and (b) all losses suffered by the Company during such
period.

6.   INCENTIVE COMPENSATION PLANS, STOCK OPTION PLANS AND WARRANTS

Under the Company's incentive compensation and employee stock option plans,
options have been granted to purchase the common stock of the Company at
prices equal to 100% of the market price of the Company's common stock at
the date of grant. At October 31, 1996, outstanding options were
exercisable at prices ranging from $6.125 to $17.375 per share.  Options
expire five and ten years from the date of grant.

Changes in options, shares reserved for issuance and options available for
future grants under these plans were as follows:

                                              SHARES
                                             SUBJECT TO   AVAILABLE
                                            OUTSTANDING   FOR FUTURE
                                   RESERVED   OPTIONS       GRANTS

BALANCE AT NOVEMBER 1, 1993       1,505,492   1,090,679     414,813
Granted                                         819,900    (819,900)
Exercised for cash                   (2,884)     (2,884)
Canceled                             (3,300)   (564,100)    560,800
BALANCE AT OCTOBER 31, 1994       1,499,308   1,343,595     155,713
Authorized and reserved             600,000                 600,000
Granted                                         474,500    (474,500)
Exercised for cash                 (261,295)   (261,295)
Canceled                                        (25,000)     25,000

BALANCE AT OCTOBER 31, 1995       1,838,013   1,531,800     306,213
Authorized and reserved             950,000                 950,000
Granted                                         546,450    (546,450)
Exercised for cash                 (229,800)   (229,800)
Canceled                            (13,200)                13,200
BALANCE AT OCTOBER 31, 1996       2,558,213   1,835,250     722,963
EXERCISABLE AT OCTOBER 31, 1996               1,015,934

The weighted average exercise price of the exercisable options at October
31, 1996 was $7.60 per share.

7.   INCOME TAXES

The provision for income taxes consisted of:

(Amounts in thousands)                        1996   1995    1994
CURRENT:
  Federal                                   $2,120 $3,617  $2,174
  State                                        309    964     516
  Foreign                                    (149)    609      58
                                             2,280  5,190   2,748

DEFERRED:
  Federal                                    1,535    626     249
  State                                       (369)  (586)    281
  Foreign                                      (21)   253    (198)
                                             1,145    293     332
                                            $3,425 $5,483  $3,080



The reconciliation of the effective income tax rates to the federal
statutory rates was as follows:

                                              1996    1995   1994
Statutory federal income tax rate             34.0%   34.0%  34.0%
State taxes, net of federal tax benefit        7.1     6.3    6.9
Foreign income taxes at rates different
 from U.S. statutory rates                     4.8     3.6    0.7
Business tax credits (state tax
 credits net of federal tax effect)          (10.3)   (3.0)
Tax benefit from export sales corporation     (1.7)   (1.0)  (1.3)
Adjustment of prior year provisions            3.1     0.2   (0.2)
     Effective tax rate                       37.0%   40.1%  40.1%

DEFERRED TAX ASSETS (LIABILITIES).  The Company's deferred tax assets and
liabilities at October 31, 1996 and 1995 under SFAS 109 arise from the
following temporary differences in accounting for financial versus tax
reporting purposes:

 (Amounts in thousands)                             1996     1995
CURRENT:
Valuation reserves and accruals not deductible
 for tax purposes until paid or utilized         $ 4,112  $ 4,700
Intercompany profit eliminated for financial
 reporting purposes which is taxable currently       440      570
Domestic net operating losses available
 for carryforward                                    521      896
Asset valuation difference between financial and
 tax reporting basis due to purchase accounting      189      254
State tax credits eligible for carryforward related
 to purchased equipment                              118
Other                                               (215)     245
     Total deferred tax assets (liabilities)        5,165   6,665

NONCURRENT:
Domestic net operating losses available 
 for carryforward                                   4,655   4,838
Foreign net operating losses available 
 for carryforward                                   2,273   1,245
Tax depreciation greater than financial 
 reporting depreciation                            (2,825) (3,169)
Intangible assets, difference between 
 financial and tax reporting
 basis and periods                                   (858) (1,204)
Burden and interest on self-constructed 
 assets expensed for tax purposes and 
 depreciated for financial reporting 
 purposes                                            (548)   (659)
Plant and equipment written off for 
 financial reporting purposes,
 depreciable for tax purposes                        308      497
Valuation reserves and accruals not 
 deductible for tax reporting
 purposes until utilized or paid                     (21)     136
Costs required to be capitalized under 
 the uniform capitalization
 tax rules which are deducted for 
 financial reporting purposes                        389      781
Liability for postretirement health 
 benefits not deductible for
 tax purposes until paid                             690      674
State tax credits eligible for 
 carryforward related to purchased equipment         678      419
Other                                                 98      (42)
                                                   4,839    3,516
Less valuation allowance                          (2,192)  (1,158)
                                                   2,647    2,358
     Total deferred tax balances                  $7,812   $9,023

The Company has provided a valuation allowance related to the deferred tax
asset resulting from the operating loss carryforwards of certain of its
foreign subsidiaries until the realization of the loss carryforwards is
more likely than not. The 1996 valuation allowance increase is primarily
due to losses reported in 1996 by certain of those subsidiaries.

The Company has recognized benefits in 1996, 1995 and 1994 for research and
development tax credits and, in 1996, for California manufacturers
investment credit.

Income taxes have not been provided on approximately $9.2 million of
unremitted earnings of the Company's subsidiary in Scotland. The Company
intends to continue to reinvest these amounts in the subsidiary's
operations.  Should any of these amounts be distributed to the Company, any
taxes on these distributions would be substantially offset by foreign tax
credits.

During 1995, the Company recorded $873,000 of deferred tax assets related
to the purchase of Netra and $4.7 million of deferred tax assets with the
consolidation of Flex Products.  These deferred tax assets have been
recorded under the guidelines of SFAS No. 109, Accounting for Income Taxes,
on the premise that future taxable income will more likely than not be
adequate to realize future tax benefits of the available net operating loss
carryforwards giving rise to these deferred tax assets.

8.   EMPLOYEE BENEFIT PLANS

U.S. OPERATIONS.  The Company has an Employee Stock Ownership Plan (ESOP+),
a defined contribution plan, for its non-Flex Products Santa Rosa employees
and a 401(k) plan with a Company match for the employees of Flex Products.
Company matching contributions to ESOP+ are determined by a profit sharing
formula with additional contributions, if any, determined by the Company's
Board of Directors.  Company matching contributions to Flex Products'
401(k) plan are 75% of the first 6% of employee contributions under the
plan. The Company follows the policy of funding Company contributions as
accrued. Company contributions to ESOP+ are made in the form of the
Company's common stock or in the form of cash to purchase the Company's
common stock. Company contributions under Flex Products' 401(k) plan are
paid in cash. The Company contributed to ESOP+ and charged to operations
$580,000, $1,225,000 and $950,000 in 1996, 1995 and 1994.  Contributions to
Flex Products' 401(k) plan were $207,000 for 1996 and $84,000 for the six
months May through October 1995.

SCOTTISH OPERATIONS.  The Company's Scottish subsidiary maintains a
contributory defined benefit pension program covering most of its
employees.  Benefits are primarily based on years of service and
compensation. The program is funded in conformity with the requirements of
applicable U.K. government regulations.  Plan assets are invested in fixed
interest and balanced fund units which are primarily comprised of corporate
equity securities.

The funded status of the plan at October 31, 1996, 1995 and 1994 is as
follows:

(Amounts in thousands)                             1996      1995      1994

Plan assets at fair value                        $6,704    $5,464    $4,971
Projected benefit obligation                     (6,250)   (5,575)   (4,820)
Plan assets greater (less) than 
 projected benefit obligation                       454      (111)      151
Unrecognized net loss                               301       870       640
Unrecognized transition asset 
 being amortized over 19 years                     (453)     (473)     (521)
     Prepaid pension cost included 
      in other assets                             $ 302     $ 286    $  270

At October 31, 1996, 1995 and 1994, the projected benefit obligations
include accumulated benefit obligations of $5,658,000, $5,344,000 and
$4,621,000 of which $5,643,000, $5,323,000 and $4,602,000 are vested.

A discount rate of 8.5% was used in determining the present value of the
projected benefit obligation.  The expected long-term rate of return on
assets was 9% and the assumed rate of increase in future compensation
levels was 5.5%.



The net pension expense recorded in 1996, 1995 and 1994 included the
following components:

(Amounts in thousands)                               1996    1995      1994

Service-cost benefits earned during the period      $ 364   $ 313     $ 275
Interest cost on projected benefit obligation         474     439       317
Actual return on plan assets                         (674)   (318)     (479)
Net amortization and deferral                         163    (160)       92
     Net pension expense                            $ 327   $ 274     $ 205

9.   POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company sponsors a contributory defined benefit postretirement plan for
its U.S. operations which provides medical, dental and life insurance
benefits to employees who meet age and years of service requirements prior
to retirement and who agree to contribute a portion of the cost.  The
Company has the right to modify or terminate these benefits at any time.

The Company's contribution is a set amount per retiree depending on the
retiree's years of service and dependent status at the date of retirement
and the age of the retiree and dependents when benefits are provided.  Cost
increases are paid by the retiree.

The postretirement plan's benefit obligation was as follows for the years
ended October 31, 1996, 1995 and 1994:

(Amounts in thousands)                                 1996   1995    1994

Accumulated postretirement benefit obligation:
Retirees                                             $1,058 $1,012   $ 894
Fully eligible plan participants                        336    243     175
Other active plan participants                          756    744     590
     Total accumulated postretirement
      benefit obligation (unfunded)                   2,150  1,999   1,659

Unrecognized loss                                      (279)  (227)    (91)
     Accrued postretirement 
      benefit obligation                             $1,871 $1,772  $1,568


The following components were included in net periodic postretirement
benefit cost for the years ended October 31, 1996, 1995 and 1994:

(Amounts in thousands)                                 1996   1995    1994

Service-cost benefits earned during the period         $ 69   $ 50    $ 59
Interest cost on accumulated postretirement 
 benefit obligation                                     141    133     120
 Amortization and deferral                               55
     Net postretirement benefit cost                   $265   $183    $179

Because the Company has established a maximum amount it will pay per
retiree under the plan, health care cost trends do not affect the
calculation of the accumulated benefit obligation or the net postretirement
benefit cost. The weighted average discount rate used in determining the
accumulated benefit obligation was 8.0% in 1996, 7.25% in 1995 and 8.0% in
1994.

10.  CONTINGENCIES AND COMMITMENTS

U.K. PATENT INFRINGEMENT SUIT.  During the past several years, the Company
has been engaged in litigation in the United Kingdom (U.K.) involving
infringement of a Company patent by a U.K. company. The Company won its
action at the Patents County Courts level but lost on appeal to the U.K.
House of Lords.  During the injunction period, the U.K. company submitted a
claim for damages totaling approximately $1.6 million for lost profits. The
Company and legal counsel are in the process of reviewing the claim.
Management believes that the amount of the claim is substantially
overstated and that the ultimate settlement will not have a material
adverse effect on the financial statements.

CONCENTRATIONS OF CREDIT RISK.  The Company grants credit to customers,
subject to credit approval, for most of its sales.  At October 31, 1996,
accounts receivable from customers in foreign countries, primarily in
Europe and Asia, were $16.1 million, constituting 58% of accounts
receivable.

OPERATING LEASE AGREEMENTS.  The Company and its subsidiaries lease
computer equipment, manufacturing space and warehouse space.  The operating
lease payments are recorded as rental expense and totaled $4,881,000,
$2,481,000 and $2,186,000 for 1996, 1995 and 1994. Future minimum operating
lease payments amount to $23.1 million, and for the years 1997 through 2001
are $5,343,000, $4,215,000, $4,068,000, $3,822,000 and $3,745,000 under
operating lease agreements in effect at October 31, 1996. During 1996, the
Company entered into three operating lease arrangements to finance the cost
of a continuous coating machine and related equipment and to finance the
cost of two coating machines to be used in the manufacturing operations of
Flex Products.  The lease terms are six years with monthly payments
totaling approximately $290,000 and buyout provisions at the end of each
lease term.

EMPLOYMENT AGREEMENTS.  The Company has approved employment agreements for
officers and employment assurance agreements for certain management and
technical employees, as well as increases in severance benefits for full-
time employees, to be effective in the event of certain changes in control
of the Company.  These agreements are currently effective through 1997.

11.  INFORMATION ON OPERATIONS

INVENTORIES.  Inventories as of October 31, 1996 and 1995 consisted of:

(Amounts in thousands)                               1996    1995
Raw materials and supplies                         $7,483  $7,330
Work-in-process                                     8,797   7,527
Finished goods                                      2,421   1,029
     Total inventories                            $18,701 $15,886

ACCRUED EXPENSES.  Accrued expenses at October 31, 1996 and 1995 consisted
of the following:

(Amounts in thousands)                               1996    1995
Workers' compensation reserve                      $  659  $  937
Ground water remediation reserve                      659   1,187
Other accrued liabilities                           5,248   7,391
     Total accrued expenses                        $6,566  $9,515

INTEREST.  Interest expense and amounts capitalized were as follows for the
years ended October 31, 1996, 1995 and 1994:

(Amounts in thousands)                        1996   1995    1994
Interest costs incurred                     $4,696 $4,326  $3,372
Less amounts capitalized                     1,172    779     157
     Net interest expense                   $3,524 $3,547  $3,215

SALES INFORMATION.  Significant customers and sales to the federal
government were as follows:

The Company's largest customer in 1996 is also a 40% owner of Flex
Products.  Sales to this customer were 13% of consolidated sales for 1996
and 12% of consolidated sales for the six months of 1995 in which Flex
Products' sales were consolidated. The Company's second largest customer in
1996 is also an approximate 10% common stockholder.  Sales to this customer
accounted for approximately 5% of sales in 1996, 8% of sales in 1995 and 7%
of sales in 1994.

Sales of products and services to the federal government, primarily under
subcontracts, were 9%, 10% and 11% of net revenues in 1996, 1995 and 1994.
Certain of these contracts are subject to cost review by various
governmental agencies.  Management believes that adjustments, if any, will
not be material to the operating results of the Company.

FOREIGN OPERATIONS.  Foreign sales for the years ended October 31, 1996,
1995 and 1994 were as follows:

(Amounts in thousands)                        1996     1995      1994
Export sales by U.S. operations:
 To Asian countries                        $24,911  $21,305   $15,012
 To European and other countries            26,761   16,012     4,243
                                            51,672   37,317    19,255
Foreign sales by European operations        38,795   42,840    40,241
     Total foreign sales                   $90,467  $80,157   $59,496

Identifiable assets of the Company's foreign operations were $37.7 million
at October 31, 1996, $43.2 million at October 31, 1995 and $43.3 million at
October 31, 1994.

DOMESTIC AND FOREIGN INCOME (LOSS). The Company's domestic and foreign
income (loss) before income taxes was as follows for the years ended
October 31, 1996, 1995 and 1994:

(Amounts in thousands)                        1996     1995      1994
Domestic                                   $10,885  $12,867   $ 8,311
Foreign                                     (1,628)     823      (627)
     Total                                 $ 9,257  $13,690   $ 7,684

CHANGES IN ACCOUNTING PRINCIPLES. In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which requires the Company to adopt the disclosure
provisions of the accounting standard for fiscal year 1997.  Pursuant to
the new standard, companies are encouraged, but are not required, to adopt
the fair value method of accounting for employee stock-based transactions.
Companies are also permitted to continue to account for such transactions
under Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for
Stock Issued to Employees," but would be required to disclose pro forma net
income and earnings per share in a note to the financial statements as if
the Company had applied the new method of accounting.  The Company expects
to continue to account for its employee stock compensation plans in
accordance with the provisions of APB 25.  Accordingly, SFAS No. 123 is not
expected to have any impact on the Company's results of operations or
financial position.

In March 1995, the Financial Accounting Standards Board issued SFAS No.
121, Accounting for the Impairment of Long-Lived Assets, which requires the
Company to adopt the accounting and disclosure provisions of the accounting
standard for fiscal year 1997. The new standard requires that long-lived
assets, certain identifiable intangibles and goodwill related to those
assets be reviewed for impairment, measured by comparing the carrying
amount of the asset to its fair value, whenever events or changes in
circumstances indicate that the carrying amount of a long-lived asset may
not be recoverable.  The Company has not assessed the effect, if any, of
adopting SFAS 121.

                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                     SUPPLEMENTAL FINANCIAL INFORMATION
                                   (Unaudited)

Results of operations for each quarter of fiscal 1996 were as follows:

Three months ended         JAN 28,    APR 28,    JUL 28,    OCT 31,
(Amounts in thousand,      1996(1)    1996(1)    1996(1)    1996(1)  1996
except per share data)
Revenues                  $43,911    $48,451    $48,772    $48,061 $189,195
Cost of sales              29,495     30,652     33,353     33,269  126,769
 Gross profit              14,416     17,799     15,419     14,792   62,426
Operating Expenses:
 Research and development   2,388      2,622      2,934      3,789   11,733
 Selling and administrative 9,107     10,094      8,109      9,835   37,145
 Amortization of 
   intangibles                287        278        284        297    1,146
  Total operating expenses 11,782     12,994     11,327     13,921   50,024
Income from operations      2,634      4,805      4,092        871   12,402
Other income (expense):
 Interest income               74         65         52        188      379
 Interest expense            (911)      (812)      (829)      (972)  (3,524)
Income before provision for
 income taxes and minority 
 interest                   1,797      4,058      3,315         87    9,257
Provision (benefit) for 
 income taxes                 754      1,705      1,117       (151)   3,425
Minority interest             303        282        165       (114)     636
 Net income                   740      2,071      2,033        352    5,196
Dividend on convertible 
 redeemable preferred stock   240        240        240        240      960
 Net income applicable 
 to common stock            $ 500     $1,831     $1,793       $112  $ 4,236
 Net income per common and
  common equivalent share   $ .05     $  .18     $  .17     $  .01    $ .41
Weighted average number 
 of common shares 
 outstanding 
 (in thousands)            10,119     10,158     10,550     10,358   10,301

(1) Reflects the consolidation of Flex Products, Inc., a 60% owned
subsidiary.

                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
                        SUPPLEMENTAL FINANCIAL INFORMATION
                                   (Unaudited)

Results of operations for each quarter of fiscal 1995 were as follows:

Three months ended         JAN 31,    APR 30,    JUL 31,    OCT 31,
(Amounts in thousand,      1995       1995       1995(1)    1995(1)  1995
except per share data)

Revenues                    $35,993   $41,487    $47,289    $44,648 $169,417
Cost of sales                21,352    25,923     29,536     29,198  106,009
 Gross profit                14,641    15,564     17,753     15,450   63,408
Operating Expenses:
 Research and development     1,387     1,632      2,546      2,836    8,401
 Selling and administrative   9,244     9,390      9,707      9,121   37,462
 Amortization of intangibles    171       304        213        287      975
  Total operating expenses   10,802    11,326     12,466     12,244   46,838
Income from operations        3,839     4,238      5,287      3,206   16,570
Other income (expense):
 Interest income                226       196        127        118      667
 Interest expense              (920)     (991)      (974)      (662)  (3,547)
Income before provision for
 income taxes and minority 
  interest                     3,145    3,443      4,440      2,662   13,690
Provision for income taxes     1,321    1,445      1,866        851    5,483
Minority interest                                    443        373      816
 Net income                    1,824    1,998      2,131      1,438    7,391
Dividend on convertible 
 redeemable preferred stock     --        --         222        240      462
 Net income applicable to 
  common stock               $ 1,824  $ 1,998    $ 1,909    $ 1,198  $ 6,929
 Net income per common 
  and common equivalent 
  share                         $.20     $.21      $.20       $.12      $.73
Weighted average number of 
 common shares outstanding 
 (in thousands)                9,025    9,377     9,557     10,066     9,510

(1) Reflects the consolidation of Flex Products, Inc., a 60% owned
subsidiary.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE
None
                                        
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11.  EXECUTIVE COMPENSATION

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, the
information called for in Part III, Items 10, 11, 12 and 13 of Form 10-K is
omitted since the Company will file with the Securities and Exchange
Commission, not later than 120 days after the close of the fiscal year
ended October 31, 1996, a definitive proxy statement pursuant to Regulation
14A in connection with its 1997 Annual Meeting of Stockholders. The
information contained under the caption "Executive Officers of the
Registrant" in Part I of this Form 10-K is incorporated by reference into
Item 10.
                                        
                                     PART IV

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

(A)    1. CONSOLIDATED FINANCIAL STATEMENTS:

          The following consolidated financial statements are included in
          Item 8:
                                                              PAGE(S)
          Independent Auditors' Report                            22
          Consolidated Balance Sheets                             23
          Consolidated Statements of Income                       24
          Consolidated Statements of Cash Flows                25-26
          Consolidated Statements of Common 
            Stockholders' Equity                                  27
          Notes to Consolidated Financial Statements              28
          Supplemental Financial Information                   40-41

(A)   2.  FINANCIAL STATEMENT SCHEDULES

          The following consolidated financial statement schedules are
included in Item 14(d):

          Schedule II - Valuation and Qualifying accounts         46

All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the
consolidated financial statements or the accompanying notes.



(A)   3.  LISTING OF EXHIBITS

The following are filed as Exhibits to this Annual Report on Form 10-K. The
numbers refer to the Exhibit Table of Item 601 of Regulation S-K.

Exhibit
No.                         Description

3.1   Restated Certificate of Incorporation. Incorporated by reference to
      Exhibit (4)(a) of the Registrant's Form 10-Q for the quarter ended
      July 31, 1988.

3.2   By-Laws.  Incorporated by reference to Exhibit (3)(b) of the
      Registrant's Form 8-K under Item 5 dated November 20, 1987.

4.1   Rights Agreement between Registrant and First Interstate Bank of
      California dated November 25, 1987. Incorporated by reference to
      Exhibit (4) of the Registrant's Form 10-K for the year ended October
      31, 1987.

4.2   Note Purchase Agreement(s) dated as of May 27, 1994 for the private
      placement of $18,000,000 of 8.71% Senior Notes due June 1, 2002
      between the Registrant and Connecticut Mutual Life Insurance
      Company, Modern Woodman of America and American Life and Casualty
      Insurance Company. Incorporated by reference to Exhibit (4)(a) of
      the Registrant's Form 10-Q for the quarter ended July 31, 1994.

4.3   Stock Purchase Agreement dated as of February 8, 1995 by and between
      the Registrant, Netra Corporation and the Sellers as identified on
      the signature page of said agreement, each a shareholder of Netra
      Corporation, for the purchase by the Registrant of all of the shares
      of common and preferred stock of Netra Corporation.  Incorporated by
      reference to Exhibit (4) of the Registrant's Form 10-Q for the
      quarter ended April 30, 1995.

4.4   Optical Coating Laboratory, Inc. 12,000 shares of 8% Series C
      Convertible Redeemable Preferred Stock Purchase Agreement among the
      Registrant and the investors named therein dated as of May 1, 1995.
      Incorporated by reference to Exhibit 4(e) of Registrant's Form S-8
      dated July 6, 1995.

4.5   Certificate of Designation, Preferences and Rights of Series C
      Convertible Redeemable Preferred Stock of Optical Coating
      Laboratory, Inc. dated May 2, 1995.  Incorporated by reference to
      Exhibit 4(f) of Registrant's Form S-8 dated July 6, 1995.

4.6   Credit Agreement dated as of May 24, 1995 among the Registrant, Bank
      of America NT&SA as agent, and Letter of Credit Issuing Bank and the
      other Financial Institutions party thereto arranged by BA
      Securities, Inc. Incorporated by reference to Exhibit (4)(a) of the
      Registrant's Form 10-Q for the quarter ended July 31, 1995.

4.7   Second Amended and Restated Credit Agreement dated as of May 24,
      1995 between Optical Coating Laboratory, Inc. and Bank of America
      NT&SA. Incorporated by reference to Exhibit (4)(b) of the
      Registrant's Form 10-Q for the quarter ended July 31, 1995.

4.8   Secured Promissory Note between Optical Coating Laboratory, Inc. and
      Aid Association for Lutherans dated November 8, 1995.  Incorporated
      by reference to Exhibit 4.8 of the Registrant's Form 10-K for the
      year ended October 31, 1995.

4.9   First Amendment to Credit Agreement dated as of May 24, 1995 between
      Optical Coating Laboratory, Inc., Bank of America, NT&SA, as agent
      for itself and the Banks, and the several financial institutions
      party to the Credit Agreement, which amendment is dated as of
      December 15, 1995. Incorporated by reference to Exhibit 4.9 of the
      Registrant's Form 10-K for the year ended October 31, 1995.

9     Not applicable.

Exhibit
No.                         Description

10.0  Registrant's Employee Stock Ownership Plan (OCLI ESOP+), as amended.
      Incorporated by reference to Exhibit (10)(c) of the Registrant's
      Form 10-K for the year ended October 31, 1988.

10.1  Registrant's 1996 Incentive Compensation Plan. Incorporated by
      reference to Exhibit A of the Registrant's Proxy Statement dated
      March 8, 1996.(1)

10.2  Registrant's 1995 Incentive Compensation Plan. Incorporated by
      reference to Exhibit A of the Registrant's Proxy Statement dated
      March 10, 1995.(1)

10.3  Registrant's 1993 Incentive Compensation Plan. Incorporated by
      reference to Exhibit A of the Registrant's Proxy Statement dated
      March 8, 1993.(1)

10.4  Registrant's 1992 Incentive Compensation Plan. Incorporated by
      reference to Exhibit  A of the Registrant's Proxy Statement dated
      March 8, 1992. (1)

10.5  Registrant's 1991 Incentive Compensation Plan. Incorporated by
      reference to Exhibit  A of the Registrant's Proxy Statement dated
      February 25, 1991. (1)

10.6  Registrant's 1987 Incentive Compensation Plan. Incorporated by
      reference to Exhibit A of the Registrant's Proxy Statement dated
      February 19, 1987. (1)

10.7  Registrant's 1984 Incentive Stock Option Plan.  Incorporated by
      reference to Exhibit (10)(d) of the Registrant's Form 10-K for the
      year ended October 31, 1985. (1)

10.8  Registrant's 1983 Incentive Stock Option Plan.  Incorporated by
      reference to Exhibit (10)(d) of the Registrant's Form 10-K for the
      year ended October 31, 1983. (1)

10.9  Registrant's 1982 Incentive Stock Option Plan.  Incorporated by
      reference to Exhibit A of Proxy Statement of Registrant dated March
      1, 1982. (1)

10.10 Registrant's Directors' and Officers' Liability and Corporate
      Reimbursement Insurance Policy. Incorporated by reference to Exhibit
      (10)(i) of the Registrant's Form 10-K for the year ended October 31,
      1987. (1)

10.11 Form of Directors' and Officers' Indemnification Agreement.
      Incorporated by reference to Exhibit (10)(j) of the Registrant's
      Form 10-K for the year ended October 31, 1987. (1)

10.12 Employment Agreements between Registrant and its Executive Officers.
      Incorporated by reference to Exhibit (10)(k) of the Registrant's
      Form 10-K for the year ended October 31, 1987. Second Amendment
      thereto incorporated by reference to Exhibit (28)(a) of the
      Registrant's Form 10-Q for the quarter ended January 31, 1992. Third
      Amendment thereto incorporated by reference to Exhibit 10.13 of the
      Registrant's Form 10-K for the year ended October 31, 1993. (1)

10.13 Form of Fourth Amendment to Employment Agreements between Registrant
      and its Executive Officers dated November 20, 1995. Incorporated by
      reference to Exhibit 10.12 of the Registrant's Form 10-K for the
      year ended October 31, 1995. (1)



Exhibit
No.                         Description

10.14 Form of Employment Assurance Agreements between Registrant and its
      key technical and professional employees. Incorporated by reference
      to Exhibit (10)(l) of the Registrant's Form 10-K for the year ended
      October 31, 1987. Form of Amendment thereto incorporated by
      reference to Exhibit (28)(b) of the Registrant's Form 10-Q for the
      quarter ended January 31, 1992. (1)

10.15 Form of Amendment to Employment Assurance Agreements between
      Registrant and its key technical and professional employees dated
      November 20, 1995. Incorporated by reference to Exhibit 10.14 of the
      Registrant's Form 10-K for the year ended October 31, 1995.(1)

10.16 Mortgage Agreement between the Scottish Development Agency and
      Registrant's Scottish Subsidiary. Incorporated by reference to
      Exhibit (10)(o) of the Registrant's Form 10-K for the year ended
      October 31, 1987.

10.17 Acquisition Agreement between Henning Von Birkhahn and Ingo Mertens
      and the Registrant's German subsidiary, OCLI Optical Coating
      Laboratory GmbH, dated December 31, 1992 for the acquisition by the
      Registrant of MMG MinnahYtte Maschinelle Glasbearbeitung GmbH.
      Incorporated by reference to Exhibit 2A of Registrant's Form 8-K
      dated December 31, 1992.

10.18 Stock and Note Purchase Agreement by and among OCLI, SICPA Holdings
      S.A., ICIA, ICIAH and Flex Products, Inc.  Incorporated by reference
      to the Registrant's Form 8-K dated May 23, 1995 and Registrant's
      Form 8-K/A dated April 11, 1996.

10.19 Employment Agreement Letter between John McCullough and the
      Registrant dated October 31, 1995. Incorporated by reference to
      Exhibit 10.18 of the Registrant's Form 10-K for the year ended
      October 31, 1995.(1)
10.20*1997 Management Incentive Plan (1)
11*   Computation of earnings (loss) per share for the years ended October
      31, 1996, 1995 and 1994.

12    Not applicable
13    Not applicable
16    Not applicable
18    Not applicable
21*   Subsidiaries of the Registrant
22    Not applicable
23*   Independent Auditors' Consent and Report on Schedules
24    Not applicable
27*   Financial Data Schedule
28    Not applicable
99    Not applicable
*     Items not previously filed are designated by an asterisk.
(1)   Designates management contracts or compensatory plan arrangements
      required to be filed as exhibits pursuant to Item 14(c) of Form 10-
      K.

(b)  REPORTS ON FORM 8-K
     None
                                        
                                        
                                        
                OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (S-X, RULE 12-09)
                             (AMOUNTS IN THOUSANDS)
                                        
COLUMN A                COLUMN B        COLUMN  C       COLUMN D    COLUMN E
                                        ADDITIONS
                      BALANCE AT  CHARGED TO  CHARGED   DEDUCTIONS  BALANCE
                      BEGINNING   COSTS AND   TO OTHER  AMOUNTS      AT END
DESCRIPTION           OF PERIOD   EXPENSES    ACCOUNTS  CHARGED OFF OF PERIOD

ALLOWANCE FOR 
  DOUBTFUL ACCOUNTS:
 Year ended 
   October 31, 1996      $1,229     $674       $(7)(a)     $121       $1,775

 Year ended 
   October 31, 1995      $1,810     $369       $136(a)   $1,086       $1,229

 Year ended 
   October 31, 1994      $1,817     $667        $85(a)     $759       $1,810


ALLOWANCE FOR INTERCOMPANY PROFIT
IN INVENTORY:

 Year ended 
   October 31, 1996      $1,316     $-0-         $-0-      $300       $1,016

 Year ended 
   October 31, 1995      $1,166     $150         $-0-      $-0-       $1,316

 Year ended 
   October 31, 1994      $1,130      $36         $-0-      $-0-       $1,166


VALUATION RESERVES FOR INVENTORY:

 Year ended 
   October 31, 1996        $616   $1,496         $-0-     $-0-        $2,112

 Year ended 
   October 31, 1995        $765     $-0-         $-0-     $149          $616    

 Year ended 
   October 31, 1994        $826     $-0-         $-0-      $61          $765


(a)The 1995 balance consists primarily of amounts recorded in connection
   with the acquisition of Flex Products. The 1996 and 1994 balances
   consist of recoveries and foreign currency translation effects.
                                        
                                        
                                        
                                        
                              SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

DATE: January 29, 1997        OPTICAL COATING LABORATORY, INC.

                              By:  /s/Joseph C. Zils
                                 Joseph C. Zils
                                 Chief Financial Officer

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

SIGNATURE                     TITLE                       DATE

                        Chairman of the Board, President,
                            Chief Executive Officer
                            (Principal Executive and
/s/Herbert M. Dwight, Jr       Operating Officer)         January 29, 1997
Herbert M. Dwight, Jr.


/s/John McCullough        Director and Vice President     January 29, 1997
John McCullough

                         Vice President, General Counsel,
                               Corporate Secretary
                           and Chief Financial Officer
/s/Joseph C. Zils         (Principal Financial Officer)   January 29, 1997


/s/Douglas C. Chance               Director               January 29, 1997
Douglas C. Chance


/s/Shoei Kataoka                   Director               January 29, 1997
Shoei Kataoka


/s/Julian Schroeder                Director               January 29, 1997
Julian Schroeder

/s/Renn Zaphiropoulos              Director               January 29, 1997
Renn Zaphiropoulos